Migrants – The Hardest Hit by the Crisis?

In my first term at UCSD, I wrote a literature review about migrant remittances (money sent home by emigrants to their families). It was the paper I’d worked the hardest on in my life up to that point, and I remain proud of it. The research I did on remittances led me to start reading papers about immigration written by economists, which in turn led me to try and figure out how economics worked because what they were doing was somehow not what I was doing*. Since then, my interests have turned very sharply towards economic sociology and the sociology of economics (and science more broadly), but occasionally those two worlds re-collide. The current financial crisis has hit hard several sectors of economic activity, one of which is construction, one of the largest employers of immigrants. So this NYTimes article on the downtown in remittances isn’t really surprising, though it is kind of tragic. Here’s a few snippets:

TOSH-TEPPA, Tajikistan — In poverty-stricken Tajikistan, the global financial crisis is measured in bags of flour.

At least that is how Bibisoro Sayidova sees it, as she looks for ways to feed her five children, since her husband, a migrant worker in Russia, stopped receiving his wages this fall. Now he is loading large sacks of dried fruit in Moscow on faith.

“Sometimes I cry when the kids don’t have socks or coats,” she said, mixing a stew of water, bread, onion and oil. “We’re still hoping he’ll get paid.”

The decline will be less severe than for other flows, like foreign investment, Mr. Ratha said, but its effects will be amplified in countries like Tajikistan that have come to depend on rapidly growing remittances. The country will rank first in the world in 2008 for remittances as a portion of its economy — 54 percent — according to an estimate by the International Monetary Fund.

Economists do not expect effects to be felt broadly in labor markets until well into next year, but the trend of booming remittances has clearly ended. In Tajikistan, remittances rose just 1 percent in November, compared with the same month last year, according to the I.M.F., down sharply from a record growth of about 90 percent early this year.

That has brought a quiet desperation into households like Ms. Sayidova’s. The area is missing so many men that it feels like wartime, and its daily allowance of four to six hours of electricity is the same as in Baghdad. Malnutrition is widespread. Unicef estimates that more than one-third of children are stunted. Ms. Sayidova’s 13-year-old son has the body of a 6-year-old.”

How we count the labor of immigrants is contentious, but it’s clear that we don’t judge our policies (much) on how they will affect people in other countries, especially not unauthorized migrants and their families. But they will.

We still think in terms of the “U.S. Economy” or the “Russian Economy”, but that’s a dangerous load of crap [I guess I am taking off my scholar hat here… -D]. Governments do not have the power to regulate (much) beyond their borders, and our concept of the economy was defined to make possible government intervention (Susuki 2003 for an excellent essay on the British case that I just came across). But the effects of action on the U.S. economy don’t stop at our borders, or any border really. One world, ready or not. One economic system, regulatory power or not.

* In particular, this paper remains an exemplar for me:
Benhabib and Jovanovic. 2007.“Optimal Migration: A World Perspective”.
Here’s the abstract:
“We ask what level of migration would maximize world welfare. We find that skill-neutral policies are never optimal. An egalitarian welfare function induces a policy that entails moving mainly unskilled immigrants into the rich countries, whereas a welfare function skewed highly towards the rich countries induces an optimal policy that entails a brain-drain from the poor countries. For intermediate welfare functions that moderately favor the rich however, it is optimal to have no migration at all.”
It’s the first line that got me: “We ask what level of migration would maximize world welfare.” What a crazy question. The conditions of possibility of that question are still what I am trying to understand.

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