Fact of the Day

by Will Wilkinson on March 3, 2008

When a Pole moves to London he can buy many more goods and services. It’s a big move up in real income plus lots of new goods are introduced to the consumption basket. So when there is lots of voluntary movement from poorer to richer regions, changes in measured income will understate some of the true gains.

The other measurement understated is the reduction in real consumption inequality.

Matt

I've not read the paper noted in comment 2 above but I strongly suspect their model must be off. Consider that at the height of the highest level of immigration, at a time when there were few if any barriers to movement from politics, in Italy, the biggest sender country in the world at the the time, in the local regions that had the highest level of out-movement, the total out-flow as only about 4-5%. The difference in wages (and opportunity) was higher then, too. This makes me think that this model, if it really predicts that 27% of the population would move, is deeply unrealistic. (This is even leaving out the fact that there has, consistantly, been about a 30-50% rate of return migration all over the world.) When you look at actual immigration rates it turns out that for many reasons most people don't want to and won't move. The dangers of mass immigration are mostly immaginary.

Pithlord

How can a los of the best-educated 27% of the population result in an increase of 16% of GNP. That can't be right.

Javier

The bottom line:

"Our simulations show that if the free movement of workers between East and West is allowed, as much as
27% of the Eastern European population would migrate to the West, with most of them being highly educated
workers. This would beneﬁt Europe as a whole by increasing the gross national product of Western Europe
by almost 1% and that of Eastern Europe by 16% thanks to the fact that the highly educated workers are
much more productive in the West and free trade spreads the beneﬁts from their extra productivity."