Emigrants Transform Institutions - For the Better

The potential negative impact of immigrants on American political and economic institutions is the best argument against liberalized immigration and the economic, social, national security, and criminal objections are not convincing.  Michael Clemens and Lant Pritchett dig into this argument, which they call the “Epidemiological Case for efficient migration restrictions,” and find it mostly wanting (their paper is the best I’ve read in a long while).  I’ve co-written an academic journal article, Cato policy paper, and other work about how immigration could affect institutions.  There is more evidence that immigration improves institutions than that it worsens them although there is still much work to be done on this issue and questions remain.

But there is evidence that emigration improves a source country’s institutions.  Fredrik Segerfeldt summarizes some of the evidence in his new book for the Adam Smith Institute in the UK.  In Chapter 6 of his book, Segerfeldt observes:

Mexican migrants play an important role in shaping political atti­tudes in the country, both through social remittances and after returning home. Political participation increases, democratic com­petition intensifies, it becomes more difficult for leading members of the party in power to enrich themselves and the chance that the rul­ing coalition will retain power decreases. In short, Mexico’s exodus makes it more democratic.

Although much of the research above deals with Mexico, there are other results indicating that emigration can strengthen democracy. In a macro study of a large number of poor countries, economists find that emigration increases both democracy and economic freedom in the sending country.

How does emigration improve Mexican economic and political institutions?  By breaking up cronyist and interventionist political arrangements:

Emigration can also help to break up or at least weaken governance based on patronage. In such countries voters tend to vote for the rul­ing party, because otherwise they risk losing the benefits that the power distributes. Entire communities will be dependent on the rul­ing party, which impairs democracy. But when people in a commu­nity receive income that is not from the state or the ruling party, citi­zens become more independent and can therefore vote for the oppo­sition if they want to. In Mexico, remittances reduce the support for the PRI, the party which, with the help of patron-client methods, managed to retain control of the country during most of the 20th cen­tury (between 1929 and 2000).

Migration and remittances may also be a way to break up old hierar­chies based on class and ethnicity. In San Pedro Pinula in Guatemala, for example, residents of the Mayan people, with the help of both returning migrants and remittances, have slowly but surely been able to challenge the ethnic underclass role they had for five centu­ries. In the oases of southern Morocco, the Haratin, poor black, land­less workers, have enhanced their status thanks to remittances from abroad.

Segerfeldt’s summary of that research can help explain the important finding by Joshua C. Hall that the ability to emigrate is correlated with improvements in source country economic freedom: 

Exitability, a variable created by Brown (2014) to capture how easy it is for citizens to “vote with their feet” is related to the change in economic freedom from 1980 to 2010 in a statistically significant manner across all specifications. This provides some indirect evidence to the importance of “exit” versus “voice” with respect to the question of institutional reform.

Emigration benefits governance in sending countries, increasing the returns from liberalized immigration policies in the developed world.  This is an exciting time to be working on how immigrants affect economic and political institutions.