364 The Manchester School governments,where there was a flow in both directions.When the flow was in one direction,the treaty would have been acceptable to a labour host and a land-or capital-dominated source.In both cases,the treaties were a less hostile alternative to migration restrictions. Discrimination between migrants by origin is optimal for a labour- influenced destination state when the reservation wage varies by origin.High- wage labour is much less of a threat to the host labour force than low.Closely connected is the skill or human capital issue.It may become worth a nation's while poaching the investment that has been made by other countries,by admitting the highly-trained.The formal model captures this characteristic by introducing a third category of labour,L3,skilled immigrants,fL3>0, L<0.For administrative reasons,in earlier periods admission rules by origin might be simpler than identifying relevant human capital. With sufficient discrimination within host labour markets,immigrant labour could be transformed from substitutes to complements to host workers.An increase in unskilled labour (through immigration)might enhance the marginal productivity of,and therefore the demand for,skilled labour.A labour-dominated host government or a trade union organization which can discriminate has an incentive to do so if immigrants can be admitted only to those occupations which enhance the marginal productivity of other labour and which are not politically influential enough to block the policy.A variation on this theme is the crowding of immigrants into occupa- tions without job security so that in a recession immigrants can be "dumped" back in their countries of origin,thereby enhancing the job security of native, enfranchised labour(Ethier,1985). Surprisingly,the introduction of trade in goods does not affect the predictions of the model.In an autarkic economy,implicitly assumed in the discussion based on slavery and serfdom,and in the migration analyses of Williamson (1974)and Greenwood and McDowell (1986),trade does not equalize factor prices,and therefore(intra-marginal)migrants motivated by economic gain will be more productive in the host country than in the source (governed by absolute advantage).However,most migrations in the nine- teenth century were between areas that participated in substantial inter- national trade.In such circumstances,movement of goods and factors are substitutes.With the free international movement of goods there is a strong tendency for one price to emerge on world markets,as Harley (1980)has graphically shown for the nineteenth-century wheat trade.If these goods were made with the same technology,then factor productivity and rewards would have converged in trading countries.With similar technologies available in the trading countries,and incomplete specialization,more migration is likely to reduce comparative advantage and,therefore,exports of the migration host countries'labour-scarce goods.In turn,this has consequences for wages and rents in host and source countries.In the limit,when tariffs and transport costs are negligible,factor price equalization takes place,once allowance has
364 The Manchester School governments, where there was a flow in both directions. When the flow was in one direction, the treaty would have been acceptable to a labour host and a land- or capital-dominated source. In both cases, the treaties were a less hostile alternative to migration restrictions. Discrimination between migrants by origin is optimal for a labourinfluenced destination state when the reservation wage varies by origin. Highwage labour is much less of a threat to the host labour force than low. Closely connected is the skill or human capital issue. It may become worth a nation’s while poaching the investment that has been made by other countries, by admitting the highly-trained. The formal model captures this characteristic by introducing a third category of labour, Lf, skilled immigrants, fLlL3 > 0, jLIL1 < 0. For administrative reasons, in earlier periods admission rules by origin might be simpler than identifying relevant human capital. With sufficient discrimination within host labour markets, immigrant labour could be transformed from substitutes to complements to host workers. An increase in unskilled labour (through immigration) might enhance the marginal productivity of, and therefore the demand for, skilled labour. A labour-dominated host government or a trade union organization which can discriminate has an incentive to do so if immigrants can be admitted only to those occupations which enhance the marginal productivity of other labour and which are not politically influential enough to block the policy. A variation on this theme is the crowding of immigrants into occupations without job security so that in a recession immigrants can be “dumped” back in their countries of origin, thereby enhancing the job security of native, enfranchised Iabour (Ethier, 1985). Surprisingly, the introduction of trade in goods does not affect the predictions of the model. In an autarkic economy, implicitly assumed in the discussion based on slavery and serfdom, and in the migration analyses of Williamson (1974) and Greenwood and McDowell (1986), trade does not equalize factor prices, and therefore (intra-marginal) migrants motivated by economic gain will be more productive in the host country than in the source (governed by absolute advantage). However, most migrations in the nineteenth century were between areas that participated in substantial international trade. In such circumstances, movement of goods and factors are substitutes. With the free international movement of goods there is a strong tendency for one price to emerge on world markets, as Harley (1980) has graphically shown for the nineteenth-century wheat trade. If these goods were made with the same technology, then factor productivity and rewards would have converged in trading countries. With similar technologies available in the trading countries, and incomplete specialization, more migration is likely to reduce comparative advantage and, therefore, exports of the migration host countries’ labour-scarce goods. In turn, this has consequences for wages and rents in host and source countries. In the limit, when tariffs and transport costs are negligible, factor price equalization takes place, once allowance has
A Political Economy of International Migration,1815-1914 365 been made for non-pecuniary advantages.Immigration is then unnecessary to enhance incomes and immigration controls alone are ineffective in raising or protecting labour income.Higher tariffs would have to accompany such measures.Equally,trade restrictions would have to offset falling freight and passenger transport costs merely to maintain a wage differential(and there- fore an incentive to migrate).3 In the absence of capital market imperfections,migration takes place so long as the difference between the capitalized value of future expected earnings in the source and destination countries are greater than the costs of moving between the two labour markets.Wages in migrant source and destination countries even without trade should differ by the travel time, money and emotional costs of migration. In an open world economy the effects of migration on factor prices will be stronger than the impact of movements of goods.+Migration can be a once-and-for-all movement whereas goods must be continually traded for factor prices to be influenced.Even,say,a 5 per cent difference between similar products in two countries,induced by tariff and transport costs,in turn raising wages in the host economy 5 per cent above those of the source, would have justified the spending of perhaps up to 50 per cent of a young migrant's annual wage on the move.Much less than that was necessary to cross the Atlantic by the end of the nineteenth century.The results of the simple(no trade)model,therefore,are applicable for the trade in goods case, within the limits of wage variation allowed by transport costs and trade restrictions. III EXPLAINING POLICY The behaviour of Latin America and the tropical dependencies,land- abundant with landowner-dominated governments,corresponds with the model predictions of encouraging immigration.The more representatively governed land-abundant dominions and Boer republics were less enthusi- astic but were constrained,one way or the other,by the international regime. Generally labour-abundant Europe exhibited a spectrum of policies from West to East,varying with the degree of democratization and distribution of income.European policies ranged from low-cost minimal encouragement of 3The imposition of the MeKinley and Dingley U.S.tariffs in 1890 and 1897,nominally intended to protect U.S.workers from low-wage European competition,may have received an impetus from falling transport costs.Such tariffs merely provided a stronger incentive for immigration to lower U.S.wages,yet paradoxically (if the tariff justification is believed), European immigration was left unrestricted. Information flows between source and destination territories were very effective and migration was often financed by remittances from the host economy.See,for example,Baines(1985, pp.27-31).By 1875,the Atlantic could be crossed in less than 10 days.Consequently,wage arbitrage was quite efficient
A Political Economy of International Migration, 1815-1 91 4 365 been made for non-pecuniary advantages. Immigration is then unnecessary to enhance incomes and immigration controls alone are ineffective in raising or protecting labour income. Higher tariffs would have to accompany such measures. Equally, trade restrictions would have to offset falling freight and passenger transport costs merely to maintain a wage differentiai (and therefore an incentive to migrate).3 In the absence of capital market imperfections, migration takes place so long as the difference between the capitalized value of future expected earnings in the source and destination countries are greater than the costs of moving between the two labour markets. Wages in migrant source and destination countries even without trade should differ by the travel time, money and emotional costs of migration. In an open world economy the effects of migration on factor prices will be stronger than the impact of movements of goods4 Migration can be a once-and-for-all movement whereas goods must be continually traded for factor prices to be influenced. Even, say, a 5 per cent difference between similar products in two countries, induced by tariff and transport costs, in turn raising wages in the host economy 5 per cent above those of the source, would have justified the spending of perhaps up to 50 per cent of a young migrant’s annual wage on the move. Much less than that was necessary to cross the Atlantic by the end of the nineteenth century. The results of the simple (no trade) model, therefore, are applicable for the trade in goods case, within the limits of wage variation allowed by transport costs and trade restrictions. 111 EXPLAINING POLICY The behaviour of Latin America and the tropical dependencies, landabundant with landowner-dominated governments, corresponds with the model predictions of encouraging immigration. The more representatively governed land-abundant dominions and Boer republics were less enthusiastic but were constrained, one way or the other, by the international regime. Generally labour-abundant Europe exhibited a spectrum of policies from West to East, varying with the degree of democratization and distribution of income. European policies ranged from low-cost minimal encouragement of 3The imposition of the McKinley and Dingley U.S. tariffs in 1890 and 1897, nominally intended to protect U.S. workers from low-wage European competition, may have received an impetus from falling transport costs. Such tariffs merely provided a stronger incentive for immigration to lower US. wages, yet paradoxically (if the tariff justification is believed), European immigration was left unrestricted. 41nformation flows between source and destination territories were very effective and migration was often financed by remittances from the host economy. See, for example, Baines (1985, pp. 27-31). By 1875, the Atlantic could be crossed in less than 10 days. Consequently, wage arbitrage was quite efficient