Good Economics for Hard Times

Migration is often portrayed as a relentless flood, an unstoppable tide of people moving from poor to rich countries, threatening jobs and social cohesion. But the truth is far more nuanced and surprisingly stable. The fraction of international migrants in the world population has hovered around 3% for decades, a figure that belies the alarmist rhetoric often heard in political discourse. This stable flow is not a deluge but a trickle, shaped by a complex web of factors beyond mere economic opportunity.

Why do so few move, given the stark wage differences between countries? It turns out that economic incentives alone are insufficient to explain migration patterns. Many potential migrants face significant risks and uncertainties. The fear of failure, the risk of losing social ties, and the lack of affordable housing in destination cities weigh heavily in decision-making. For example, in a study from Bangladesh, even when given information about job availability and financial support to cover travel costs, many chose not to migrate or returned quickly. These findings reveal that migration is as much a social and psychological choice as an economic one.

Social networks play a pivotal role. Migrants often move where they have family or friends who can help them find work and settle in. These connections reduce the costs and risks of migration, acting as bridges into new communities. Without such networks, many potential migrants remain rooted in their home regions.

Interestingly, forced relocations, such as those caused by natural disasters or wars, often lead to better economic outcomes for those displaced. For instance, after a volcanic eruption in Iceland, young people forced to move earned more than those who stayed. Similarly, post-war resettlement in Finland led to increased urbanization and formal employment among displaced populations. These cases highlight how breaking social inertia can unlock economic potential.

Yet, migration remains a daunting leap into the unknown. The fear of failure and loss of dignity can deter even those who might benefit. This fear is compounded by the stigma of failure and the personal identity tied to staying put. Understanding these human dimensions is crucial to any policy aimed at facilitating migration and integration.

As we move forward, it is essential to recognize that migration is not just about economics but about human connections, risks, and hopes. Policies that ease transitions, provide social support, and respect human dignity will be key to unlocking the benefits of migration for all.

With this foundation on migration, let us now turn to the broader economic forces shaping our world — international trade and its complex impacts on societies and workers.