In the last forty years, migration has only risen by about .5%. While that number isn’t very significant, the study of migration has, however, increased significantly. It has increased as migration and immigrants themselves have come to play an important role in many governments’ policies. Whereas, the United States was once known as the land of immigrants, today’s world is made up of manymulticultural states. Therefore, in order to come to migration policies that will benefit both the state and immigrants, it has become pertinent to study migration. Although there are many approaches used to examine migration, perhaps the most established is the economic perspective. While all the economic theories of migration focus on the economy to explain the reasons and means of migration, thereare competing models of economic theories that utilize different levels of analysis, such as the individual, the household, the national, and the international; and thus come to different conclusions as to the causations and implications of migration. This paper will look at the five models within economic theories- neoclassical economics macro and micro theories, new economics, dual labor market,and the world systems theory. Furthermore, this paper will look at the strengths and flaws within each approach and in the economic theory of migration as a whole.
The neoclassical economics theory is a well-known theory that has been around for a long time. And it is divided into two models: Macro and Micro. The country is the level of analysis used in the Macro theory. The theory posits,"…international migration, like its internal counterpart, is caused by geographic differences in the supply of and demand for labor." (36) Migration occurs due to differences in wage between countries. Those countries, which have a labor surplus relative to capital, have a lower wage rate than those countries with a capital surplus relative to labor. This results in workers from low-wage countriesmigrating to high-wage countries. Therefore, under the macro theory, the labor market is the main influence of international migration and regulation of the labor market will in turn regulate migration. A solid evidence of migration due to the neoclassical economics theory is Germany after WW II. By the 1950’s, Germany’s economy had fairly recovered well enough that it had a capital surplus relativeto labor. The German government negotiated migration policies in the form of guest-worker policies with countries that had a labor surplus relative to capital, such as Italy (1955), Greece and Spain (1960). However, in the 1970s, when their economy slowed down relative to labor, Germany issued a migration stop. It is important to note however, that as workers move from labor-abundant countries tolabor-scarce ones, capital, in turn flows from capital rich to capital poor countries. And as skilled workers are considered as capital, the migration of skilled workers doesn't follow the same vein as that of unskilled workers.
Similarly, the microeconomics model assumes that people migrate because of wage differences and employment rates amongst countries. However, the decision to migrate isbased on the individual rather than countries’ policies on the labor market. In this model, the individuals will move to maximize their incomes increase their wages and gain a positive monetary return from the movement. Individuals choose to migrate after a cost-benefit analysis of their relocation. This includes ‘the material costs of traveling, the costs of maintenance while moving and lookingfor work, the effort involved in learning a new language and culture, the difficulty experienced in adapting to a new labor marker, and the psychological costs of cutting old ties and forging new ones.’
While the neoclassical economics theory could explain migration in the industrial era, contemporary international migration has become too complex to be explained by wage differentials....
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