Why are policy attitudes so different?
If labour migration and international trade have similar implications for global efficiency and factor markets, why are immigration policies so much more restrictive than trade policies? Through successive rounds of negotiations, average industrial tariffs rates around the world have fallen steadily since WWII. By contrast, immigration policies have remained tight and, in many countries, they have become tighter (Faini 2002, Hatton 2007). As a result, many economists argue that potential gains from more open labour migration dwarf those from freer trade. As Dani Rodrik puts it, “the gains from liberalising labour movements across countries are enormous, and much larger than the likely benefits from further liberalisation in the traditional areas of goods and capital. If international policymakers were really interested in maximising worldwide efficiency, they would spend little of their energies on a new trade round or on the international financial architecture. They would all be busy at work liberalising immigration restrictions” (Rodrik 2002, p. 314).
However, unless we have a better understanding of why trade and migration policies differ so much, it is difficult to know whether migration reforms are likely to be successful. If the gains from liberalising international migration generate such large worldwide gains, why does migration lag so far behind international trade in terms of permissible mobility?
To address this question, we examine the determinants of the voting behaviour of US legislators on all major trade and migration reforms voted in Congress during the period 1970-2006. In terms of trade reforms, we include in all our analysis votes on the implementation of multilateral trade agreements (Tokyo and Uruguay Round rounds of the GATT) and preferential trade agreements (e.g. the Canada-US Free Trade Agreement and NAFTA) negotiated in this period, as well as the votes on the conferral and extension of fast track trade negotiating authority to the president, which makes
Open to goods, closed to people?
it easier to negotiate trade agreements (see Conconi, Facchini and Zanardi 2012).1 In terms of migration votes, they include two different categories: general immigration and illegal migration (see Facchini and Steinhardt 2011), and we restrict the analysis to those that have a direct (positive or negative) impact on the size of the unskilled labour force in the US.
We match House roll call voting data on trade and migration reforms with information about legislators’ names, states and congressional districts, which enables us to uniquely identify the legislators and link them to their constituency. We also collect systematic information about the representatives (e.g. party affiliation, age, gender, incumbency gains as well as on economic and non-economic characteristics of their constituencies (e.g. skill composition, fiscal burden of immigrants, percentage of foreign-born population).
From a methodological point of view, we first run probit regressions on the full sample of votes, studying the determinants of individual legislators’ decisions on trade and migration reforms. We then focus our analysis on a subsample of trade and migration reforms that have taken place during the same Congress. This allows us to control for unobserved characteristics of legislators, which might affect their voting behaviour on trade and migration bills. Finally, we estimate bivariate probit regressions, allowing legislators’ decisions on trade and migration to be interrelated.
Emprical results
Our empirical analysis shows both similarities and differences in congressmen’s voting behaviour on these policy issues. In line with the predictions of standard international trade models, we find that a constituency’s skill composition affects representatives’
voting behaviour on trade and migration liberalisation bills in the same direction. In
1 Previous studies trying to understand differences between trade and migration policies have used surveys of individuals’
opinions on these issues (e.g., Hanson, Scheve and Slaughter, 2007; Mayda, 2008). Ours is the first study to focus on actual policy choices by legislators.
particular, representatives of districts with relatively more highly skilled labour are more likely to support liberalising unskilled migration as well as trade with labour-abundant countries. Party affiliation has instead opposite effects – Democrats are more likely to support liberal immigration policies but to oppose trade liberalisation.
Voting differences between the two issues are also driven by districts’ characteristics that affect decisions on immigration policy but do not influence the voting behaviour on trade.
• We find that the higher the fiscal burden of immigrants for a constituency, the less likely the representative of the constituency is to support liberal migration policies.
This is in line with previous studies showing that one of the reasons for the opposition to immigration is the concern that admitting low-skilled foreigners raises the net tax burden on US natives (Hanson, Scheve and Slaugther 2007, Facchini and Steinhardt 2011).
• Districts’ ethnic composition also affects voting behaviour on immigration reforms – support for these reforms increases with the share of foreign-born citizens in a constituency.
This finding confirms the importance of network effects, which has been emphasised in recent studies (e.g. Munshi 2003).
Our study can help to explain the gap between the global regulation of labour migration and that of trade flows. In line with standard international trade models, our empirical analysis suggests that trade and migration have parallel impacts on factor markets.
However, the flow of human beings has political, cultural, social, and economic effects that clearly differ from those from the flow of goods. These effects can explain why legislators are more likely to support opening barriers to goods than to people.
Open to goods, closed to people?
References
Conconi, P., G. Facchini, and M. Zanardi (2012). “Fast Track Authority and International Trade Negotiations”, American Economic Journal: Economic Policy, forthcoming.
Facchini, G., and M. F. Steinhardt (2011). “What Drives US Immigration Policy?,”
Evidence from Congressional Roll Call Votes”, Journal of Public Economics 95, 734-743.
Fernández-Kelly, P., and D. S. Massey (2007). “Borders for Whom? The Role of NAFTA in Mexico-US Migration”, Annals of the American Academy of Political and Social Science 610, 98-118,
Hanson, G. H., K. Scheve, and M. J. Slaugther (2007). “Public Finance and Individual Preferences over Globalization Strategies”, Economics and Politics 19, 1-33.
Hatton, T. J. (2007). “Should We Have a WTO for International Migration?” Economic Policy 22, 339-383.
Faini, R. (2002). “Development, Trade, and Migration”, Revue d’Économie et du Développement, Proceedings from the ABCDE Europe Conference, 1-2: 85-116.
Mayda, A. (2008). “Why are People more pro Trade than pro Migration?” Economics Letters 101, 160-163.
Mundell, R. (1957). “International Trade and Factor Mobility”, American Economic Review 47, 321-335.
Munshi, K. (2003). “Networks in the Modern Economy: Mexican Migrants in the US Labor Market”, Quarterly Journal of Economics 118, 549-599.
Razin, A., and E. Sadka (1997). “International Migration and International Trade”, in Handbook of Population and Family Economics 1, 851-887.
Rodrik, D. (2002). “Comments at the Conference on Immigration Policy and the Welfare State”, in Boeri, T., G. H. Hanson, and B. McCormick (eds.), Immigration Policy and the Welfare System, Oxford University Press.
About the authors
Paola Conconi holds is a B.A. in Political Science from the University of Bologna, an M.A. in International Relations from the School of Advanced International Studies of Johns Hopkins University, and a M.Sc. and a Ph.D. in Economics from the University of Warwick. Her main research interests are in the areas of international trade, international migration, regional integration and political economy. Her contribution to the project will be on governance of trade institutions, on which she has published various papers in international journals such as the Journal of International Economics or the Journal of Public Economics.
Giovanni Facchini is a Professor of Economics at Erasmus University Rotterdam and at the University of Milan, having taught previously at the University of Essex, the University of Illinois at Urbana Champaign and at Stanford. His research focuses on international trade and factor mobility. He has published in journals such as the Journal of the European Economic Association, the Review of Economics and Statistics, the Journal of International Economics, the Journal of Public Economics, among others.
Giovanni is a CEPR Research Affiliate, a fellow of CES-Ifo and IZA, and a Faculty Affiliate at the Institute for Government and Public Affairs at the University of Illinois-Urbana Champaign. He coordinates research on international migration at the Centro Studi Luca d’Agliano in Milan. He obtained a PhD in Economics from Stanford University in 2001.
Max Friedrich Steinhardt is a Senior Researcher in “Demography, Migration and Integration” at the Hamburg Institute of International Economics (HWWI). His research interests lie in the fields of labour economics, economics of migration, applied microeconometrics and regional economics. He studied economics at the
Open to goods, closed to people?
University of Hamburg. 2009 he finished his doctoral dissertation with a thesis about the economics of migration. Within the TOM Marie Curie Training Networks Dr. Max Friedrich Steinhardt stayed at the Centro Studio Luca D’Agliano (LdA) in Milan and at the European Center for Advanced Research in Economics and Statistics (ECARES) in Brussels. Furthermore, he worked as an external consultant for the OECD.
Maurizio Zanardi is an Associate Professor of Economics at the Universite Libre de Bruxelles and a member of ECARES. His research interests include international trade and political economy. He received his PhD in Economics from Boston College and BA in Economics from the Catholic University of Milan.
Introduction
The current recession, concentrated in Europe and North America, has raised questions about immigration policy. When labour markets are slack, attitudes towards immigrants become more negative, the case for keeping the door ajar gets weaker, and political imperatives for tougher immigration policy get stronger. Yet in the current recession, anti- immigration policy has been muted – and all the more so when compared with the past.
This chapter draws on historical experience to answer four questions.
• How flexible is the response of migration to the business cycle?
• Do immigrants bear a disproportionate burden in recessions?
• What drives public opinion on immigration, especially at times of recession?
• How does immigration policy respond in recessions and why is it different this time?
Recessions and immigration — past and present
International migration has always been sensitive to the ebb and flow of the business cycle.1 This was so in the 19th century and it remains true today. If immigrants are deterred by high unemployment and existing migrants go home, then such responses
1 See, for example, Özden et al (2011).
Timothy J Hatton
Australian National University, University of Essex, and CEPR