Exodus by Paul Collier

Author:Paul Collier
Language: eng
Format: epub
ISBN: 9780141924137
Publisher: Penguin Books Ltd
Published: 2013-10-02T16:00:00+00:00

WHO SHOULD GET THE GAINS FROM MIGRATION?

Who should eat that free lunch? That is, to whom should the productivity gains from migration accrue? In a market economy the default option is that productivity accrues to the producer: workers are paid according to their productivity. So, in the absence of a policy override, the gains from migration will accrue to migrants. While the economic theory that links income to productivity explains how things will be, rather than how they ought to be, it does have some moral force. There is clearly some presumption that in large part the fruits of labor should belong to the worker. However, the principle that income can be taxed in order to benefit others is also well established, and so migrants do not have an exclusive claim to the gain in productivity. Of course, like indigenous workers in host countries, they will be subject to the country’s tax system, but this is in no sense immigrant-specific. Is there an ethical basis for requiring migrants to contribute more than this, and if so, to whom?

The most prominent such claim has been made on behalf of the societies of origin. Professor Jagdish Bhagwati, a highly distinguished economist at Columbia University and himself an emigrant from India, has long proposed that migrant workers should pay a special supplemental tax, the revenue from which would accrue to their countries of origin. At least superficially, this is ethically very attractive: migrants receive a massive windfall gain that makes them dramatically better off and so able to help their much poorer fellow citizens in the country they have left. From the utilitarian universalist perspective such an income transfer is highly beneficial: since the migrants are much better off than the people left behind, a financial transfer reduces the utility of migrants by much less than it increases the utility of recipients. Of course, within the utilitarian universalist framework the same argument could be used to justify a large tax transfer from the indigenous population of high-income societies.

But if the utilitarian ethical framework leaves you feeling unconvinced, then it becomes somewhat harder to find good reasons to justify a migrant-specific tax. A special tax could be seen as compensation for the education that the migrant received before leaving. But its costs are modest relative to the gains in productivity: they may not justify a significant rate of taxation. Indeed, the migrant might reasonably retort that it is only because elites within her country of origin have mismanaged the society so badly that it is necessary for her to migrate in order to realize the productivity of which she is capable. The elites who control the society should not, therefore, be rewarded by an enforced tax transfer.

The migrant might also plead that she indeed cares sufficiently deeply about her society of origin to send money home, but since she does not trust its elites, she prefers to send it to individuals in her own family. There is plenty of evidence for such behavior: the typical migrant makes remittances of around $1,000 per year to her country of origin.

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