Ideas to Action:

Independent research for global prosperity



Cover of Working Paper 152
September 30, 2008

Human Capital Investment under Exit Options: Evidence from a Natural Quasi-Experiment - Working Paper 152

When countries select immigrants based on skill, what happens in the migrants' countries of origin? Departing skilled workers obviously tend to reduce stocks of skill there, but the prospect of skilled migration can induce more investment in skill. It is not clear which effect dominates. This paper studies one of the fastest and relatively largest exoduses of skilled workers on record, in the Pacific country of Fiji, which paradoxically produced a net increase in the stock of skill within Fiji. It offers evidence that skilled migration prospects caused that net increase, and evidence to rule out several competing explanations.

July 3, 2008

The Place Premium: Wage Differences for Identical Workers across the U.S. Border - Working Paper 148

Are your wages determined by what you know, or where you are? This paper estimates how the wages of workers in 42 developing countries would change if the same people could work in the United States. It uses a rich new database on over two million workers around the world. A worker from the median country would earn about 2.7 times as much in the US as at home. This means that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) simply allowing labor mobility can reduce a given household’s poverty to a much greater degree than most known antipoverty interventions inside developing countries.

Michael Clemens , Claudio E. Montenegro and Lant Pritchett
March 13, 2008

Income per Natural: Measuring Development as if People Mattered More Than Places - Working Paper 143

Data on the average income of a resident of Ecuador is easy to find. But until now there has been no data on the average income of a person born in Ecuador, regardless of where she or he lives. In this paper, research fellow Michael Clemens and non-resident fellow Lant Pritchett introduce a new dataset, income per natural: the mean annual income of persons born in a given country regardless of residence. Turns out that defining things this way makes a big difference, and not just for tiny nations. Income per natural differs by more than 10% from income per resident for dozens of countries including Vietnam, Kenya and Morocco. In other words, one of the largest sources of increased income for people in many parts of the developing world is moving to another country.

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