Workers Without Borders? Culture, Migration and the Political Limits to Globalization

Sanjay Jain, Sumon Majumdar and Sharun Mukand ()
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Sharun Mukand: Tufts University

No 1196, Working Papers from Queen's University, Department of Economics

Abstract: Despite potentially large welfare gains, the barriers to the international mobility of workers are high and persistent. We develop a simple framework that throws light on why the globalization of labor differs from that of goods and capital. In doing so we ask whether a government will ever spurn the large welfare increase from freer labor mobility, even if such a policy had no distributional impact on native workers, was desired by the host country's citizens and if the repatriation of overstaying workers could be costlessly enforced. In addressing these questions we examine the role of culture in driving the political economy of migration policy. The paper shows that there exists a broad political failure that results in inefficiently high barriers restricting the import of foreign workers. We examine the conditions under which a country is best positioned to reap the economic gains from the globalization of temporary (or permanent) labor migration. We show that culturally homogeneous countries that are poor at cultural assimilation may be better positioned to take advantage of short term foreign worker programs than more culturally diverse and tolerant countries. Our framework suggests that simple alteration of existing policy measures can help encourage international labor mobility. In particular, restrictions on the mobility of the foreign worker across firms (e.g. the H-1B program in the U.S. or the Employment R in Singapore) might work to the detriment of the host country, and make it more difficult to sustain a credible temporary worker migration program. Therefore, any policy measure that improves the mobility (and bargaining power) of the foreign worker helps not only the worker, but more surprisingly, also boosts host country welfare.

Keywords: international migration; political economy; cultural heterogeneity; temporary workers (search for similar items in EconPapers)
JEL-codes: D72 F22 J61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-mig, nep-pol and nep-sea
Date: 2008-12
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Persistent link: http://EconPapers.repec.org/RePEc:qed:wpaper:1196

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