How would open borders affect the well-being of the world’s population? I’ve spent much of today reading what some economists have to say about this and there seems to be something of a consensus that if people were able to move freely across borders, to live and work where they chose, then the people who moved from poor countries to rich ones would enjoy massive benefits. One author, Michael Clemens, raises the possibility of a doubling of global income (PDF); another, John Kennan, envisages a doubling of the incomes of the migrants . Either way, the gains are huge: put those poor people into the institutional and capital contexts of wealth countries and they would do much much better.
What there seems to be much less agreement on is the effect of open borders on the wages of the non-migrant population of the wealthy receiving countries. Clemens and Kennan generally concede the possibility of some small depressive effect but argues that it would be temporary and/or could be compensated for at a policy level by suitable taxes and transfers. This is a radically different story from that told by, for example, Ha-Joon Chang, in his book 23 Things They Don’t Tell You About Capitalism . Chang’s third “thing”, “Most people in rich countries are paid more than they should be” contains a parable of two bus drivers, Ram in India and Sven in Sweden. They do similar jobs, but if anything Ram’s requires more skill as he “has to negotiate his way almost every minute of his driving though bullock carts, rickshaws and bicyles stacked three metres high with crates.”(25) Yet Sven is paid 50 times more than Ram is (and it would be easy to find examples where the pay divergence is much larger, perhaps as much as 1000 times between unskilled labourers in poor and wealthy countries). Chang things it implausible that Sven embodies more human capital than Ram does as a result of education and training, since most of his Swedish education is irrelevant to what he does on the job.
So if Chang is right, an open border policy would have a massive depressive effect on the earnings of non-migrant workers in wealthy countries since other people would be happy to take unskilled or low-skilled jobs for much less than the current wage (but more than they could get at home).
Given the massive aggregate welfare gains from migration, perhaps supplemented by other thoughts about human rights and freedom of movement, some peope will argue that open borders is the right policy regardless of its effects on the poor citizens of wealthy countries. And they may be right about that. But clearly if we are to wage a political battle for more liberal immigration policies in Festung Europa and the United States, then the truth about the benefits or harms to the existing population is important. It is one thing to say to an electorate that free migration will probably not harm them (and may even benefit them) and quite another to say that such harms as they suffer are swamped by the benefits in a global utilitarian calculus. The first stands a chance of democratic success; the latter, realistically, has none.
Both Clemens and Kennan, in assessing the benefits and harms, concentrate almost exclusively on income, discussing cultural, environmental and other harms in the receiving nations only superficially. Chang, who opposes open borders, but supports some “improvement” in existing migration policies given more weight to these factors as well as expressing concerns about “brain drain” from poor countries (which the other two economists are inclined to minimize as a factor). Clearly an assessment purely in wealth and income terms can’t be the whole of the well-being story, since population movements on the scale that Phelps and Kennan contemplate typically come with other problems, such as serious ethnic conflict. But I tend to agree with all of them about the massive potential benefits to those of the global poor who would get the chance to move. It would be nice, however, if economists could come to a consensus about the economic effects on the poor citizens of wealthy states.