The Place Premium: Bounding the Price Equivalent of Migration Barriers

Michael Clemens, Claudio Montenegro and Lant Pritchett

The Review of Economics and Statistics, 2019, vol. 101, issue 2, 201-213

Abstract: Large international differences in the price of labor can be sustained by differences between workers or by natural and policy barriers to worker mobility. We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally representative microdata on both U.S. immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting for low-skill men is greater than $13,700 per worker per year. Natural and policy barriers may each create annual global losses of trillions of dollars.

Date: 2019
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