Lecture Introduction to economics: Social issues and economic thinking: Chapter 12 - Wendy A. Stock
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Introduction to
Economics:
Social Issues
and Economic
Thinking
Wendy A. Stock
Chapter 12
Immigration and the
International Trade of Labor
Copyright © 2013 John Wiley & Sons, Inc. / Photo Credit: OMAR TORRES/AFP/GettyImages,
Inc.
PowerPoint
Prepared by
Z. Pan
After studying this chapter, you should be
able to:
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Describe the extent of
international migration
Assess the costs and benefits of
migration for migrants
Copyright © 2013 John Wiley & Sons, Inc.
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Assess the costs and benefits
of migration for host and
home countries
Define and describe the
extent of outsourcing and
offshoring
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Immigrant and emigrant
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An Immigrant is someone who migrates into a
host country.
An Emigrant is someone who migrates out of
their home country.
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International Migrants as a Percentage of the
Population
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U.S. Immigrant Population by State 2010
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Costs and Benefits for Immigrants
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Monetary costs and benefits:
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the differences in earnings and cost of living across
locations,
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the cost of flying or driving to the host location
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the cost of moving belongings.
Nonmonetary costs and benefits:
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changes in the distance from family and friends
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changes in recreation and leisure opportunities
changes in language, cultural, and governmental
Copyrightdifferences
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Determinants of Immigration
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Improvement in earnings opportunities attract
immigrants
Higher monetary or other costs of moving reduce
immigration
People who are financially secure and have more
labor skills are more likely to migrate than others
Younger individuals are more likely to migrate than
older individuals
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Impacts of Immigration on Host Country
Labor Markets
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Impacts of Immigration on Host Country
Labor Markets
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Importance of Immigrants’ Skills
The impact of immigrants on local labor markets
depends on whether immigrants are complements
or substitutes for native workers, which in turn
depends on the level of training and skills that
immigrants bring to the labor market.
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Skill levels of Immigrant Population in the
U.S.
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Impacts of Immigration on Product
Markets
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Immigration has impacts on product markets in
both host and home countries because changes
in the size of a population generate changes in
the demand for goods and services.
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e.g. U.S. tortilla sales revenue grew from $300 million to
over $1.5 billion per year between 1980 and 1990
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Impacts of Immigration on Host Country
Resources
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Costs – Pressure on host country resources: (public
schools, roads, other government services)
Benefits – Contribution immigrants generate
(including tax revenue)
The National Research Council estimated that over
the course of a lifetime, the average U.S. immigrant
pays about $115,000 more in taxes (in 2011 dollars)
than he uses in public resources
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The Impact of Emigration on Home Country
Labor Markets
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Remittances
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Remittances are transfers of money to home
countries by workers who have emigrated.
Remittances are an important source of income for
emigrants family members in many developing
countries
Remittances generate increases in the demand for
normal goods and services in the home country.
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OUTSOURCING AND OFFSHORING AS
INTERNATIONAL TRADE IN LABOR
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Outsourcing occurs when someone hires another
person or firm to produce a good or service.
Offshoring is the movement of a firm’s production
from one country to another.
Controversy surrounding outsourcing arises
because the distribution of the costs and benefits of
outsourcing are not equally shared.
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The Impact of Outsourcing on Home Country
Labor Markets
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The Impact of Outsourcing on Home Country
Product Markets
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Questions/Discussions
In a recent speech, a U.S. government official stated,
“The physical distance along a great circle from
Wausau, Wisconsin to Wuhan, China is fixed at
7,020 miles . . . [However] One of the defining
characteristics of the world in which we now live is
that, by most economically relevant measures,
distances are shrinking rapidly. . . .” How will the
“shrinking distance” between the U.S. and China
affect labor markets in the U.S.? Assume that wages
for accountants are lower in China than in the United
States. Does this mean that accounting jobs in the
United States will be lost to China? Explain.
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Key Concepts
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Immigrant
Emigrant
Outsourcing
Host country
Home country
Offshoring
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