# How can migrants afford huge smuggling fees? Three answers

Even in the historical era of near-open borders, migration was not free of cost. But the main costs of international migration were similar to the costs of intranational migration: the cost of transporting one’s person and belongings, and of finding work, lodging, and sustenance at one’s new home. Legal restrictions on migration imposed no financial cost. At some immigration checkpoints, such as Ellis Island, officers turned back migrants who they thought would be unable to sustain themselves, but they did not charge an admission fee (beyond a small fee to cover administrative costs). So migrants simply had to demonstrate that they had enough money to take care of themselves for a few days while they looked for a job, rather than pay a huge fee to the officers.

Today, legal travel costs are quite low. One can get a one-way flight between diametrically opposite corners of the world for well under $2000. This is far from a negligible amount of money for the world’s poorest people, but it’s something that people above the very lowest rungs of poverty could probably access in loans. Particularly given the huge place premium, it seems like people would be quite willing to lend money to finance journeys, and travel costs wouldn’t be a bottleneck. For migrants with more assets back home, moving costs could be greater insofar as they may need to dispose of their assets before moving, but again, this cost is a small proportion of the migrant’s net worth. (Two somewhat related posts of mine: factors that would constrain migration if borders were opened quickly over a short span of time, and selection effects for migrants: some a priori possibilities. The latter discusses the way that moving costs could lead to selection effects for migrants). At present, however, legal migration is a very difficult option for many people. Those who seek to migrate unlawfully have two options: either enter on a tourist visa or temporary work/study visa and then overstay it, or smuggle oneself in illegally. But temporary work/study visas are pretty hard to get too. Consular officers are quite cautious about granting tourist visas to people who seem like they are trying to use it as a pretext to migrate, and the tourist visa option is also thereby rendered unavailable to many potential migrants (in fact, consular officers have an extraordinary level of discretion here and little accountability to the visa applicants they deny, see my co-blogger John’s posts on the subject here, here, and here). Moreover, coming in on a tourist visa leaves a legal trail for the migrant, making it potentially easier for authorities to track the migrant down. Thus, the incentive for people to cross borders surreptitiously, despite the considerable physical discomfort and danger. In the United States, somewhere between a third and a half of migrants who are not currently in legal status are people who actually crossed the border without authorization. African migrants stranded on a boat coming from Libya wait for rescue services near Sfax, on the Tunisian coast, on June 4, via CNN As discussed on our human smuggling fees page, the costs of smuggling oneself in illegally are nontrivial (if you’re just interested in the prices, see this Havocscope page). Costs vary heavily by source country but are generally at least ten times the legal travel costs. Illegal immigration from China or India to the United States costs in the range of$50,000. And these are the pure financial costs, not the other costs of the journey, including the physical risks. This raises a natural question: who but the very wealthy could afford such sums? After all, most of the people who migrate illegally aren’t well-off. Where are they getting this money?

The most obvious answer (which is a non-answer of sorts) is that most people don’t. The legal barriers to migration are successful in keeping a significant fraction, probably a vast majority, of potential migrants, out. This is exactly why we are far from open borders and it’s such a radical proposal. As my co-blogger David Bennion wrote:

The immigration system isn’t broken, it is working as intended. But it needs to be broken; we need to break it.

Nonetheless, enough people do migrate in this manner for the phenomenon to be worth understanding. As I discussed in my blog post on snakeheads such as Sister Ping, a fair number of people migrate all the way from China to the United States in cramped ships, paying the huge human smuggling fees.

I outline three interconnected answers below. Here’s the list:

1. Personal and family savings back home
2. Financing by family members already in the destination country
3. Loans from outside the family

# Selection effects for migrants: some a priori possibilities

This post combines many different threads I’ve explored in earlier posts. Back in July 2013, I wrote a post arguing that it’s important to get a handle on both the quantity and the selectivity of migration. Recently, I wrote a series of blog posts laying out a detailed conceptual framework for the empirical analysis of migration (introductory post here, describes and links to other posts). While laying out this conceptual framework, I noted that, under any policy regime other than complete closed borders, there is likely to be both a selection effect and a treatment effect for migrants. Specifically, in part 3, I considered a situation where we assume for simplicity that the people who do not migrate are not affected by the act of migration. In that case, we can concentrate on selection and treatment effects for migrants and ignore the treatment effects on non-migrants. Our goal was to discuss the rank-ordering and quantitative comparison of the following four values (where X is the indicator of interest):

1. Performance of natives of target country B on indicator X.
2. Performance of natives of source country A (who would not move under either policy) on indicator X.
3. Performance of potential migrants on indicator X if they were allowed to migrate (i.e., in the migration scenario).
4. Performance of potential migrants on indicator X if they were not allowed to migrate (i.e., in the no-migration scenario).
5. Ability to plan and execute a move.

Note that:

• The difference between (2) and (4) measures the selectivity of migration relative to the source country.
• The difference between (1) and (3) measures the selectivity of migrants relative to the target country, or equivalently, to their failure of assimilation (the assimilation may be “upward” or “downward” depending on how the migrants compare with the target country natives).
• The difference between (3) and (4) refers to the treatment effect of migration on migrants.

The goal of this blog post is to come up with a priori arguments on how migrants might be selected on various parameters. We’re not concentrating on the treatment effect directly, except insofar as beliefs about the treatment effect affect the selection of migrants. In some cases, we cite empirical evidence to support the claim. But the goal is not to make concrete empirical predictions, but to lay out general considerations that would help make concrete predictions for specific migration policy regimes.

Because of the vagueness of our analysis, we don’t distinguish heavily between selectivity of migrants relative to source countries and selectivity relative to target countries. However, our arguments, as stated here, apply a priori far more to selection relative to source countries than to selection relative to target countries. This follows from the nature of the analysis: we’re trying to figure out who, from a given bunch of people in the same environment, would end up moving. Therefore, these are best thought of as arguments about emigrant selectivity (comparing (2) and (4)) than about immigrant selectivity (comparing (1) and (3)). At the end of the blog post, we’ll discuss what we can infer about immigrant selectivity from the information.

Also, for the most part, I restrict attention here to considerations that would be relevant even under open borders. There are some forms of selectivity that arise from fiat: migration policy dictates that migrants must satisfy a set of conditions in order to be allowed in. We discuss these only in passing here, and will return to explicit policy selection in a separate post (more remarks on this at the end of this post). Note that I ignore explicit policies in the post but I certainly consider them quite important. I am not an economic determinist.

#### Costs of moving

Migrants are moving to a new place. Even under an open borders regime, moving requires nontrivial fixed costs in terms of time, money, and emotional energy. The magnitude of the costs depends on the geographic distance moved, the cost differential (moving to a place with a higher cost of living means one’s savings are less use for covering the initial costs of setup, even if one expects to eventually recoup those costs through higher earnings), as well as the cultural and linguistic distance between the source and destination. Note that all these apply even under open borders. In a regime with migration restrictions, there are additional costs of time, money, and uncertainty in applying for permission to move. Depending on the feasibility of return migration, one may also need to dispose off assets before making the move. Those crossing borders illegally need to incur coyote fees and undertake time-consuming and dangerous journeys to reach their destination.

What attributes does the high cost of moving select for? It’s hard to say, but here are some guesses:

• Money: People who have more money can afford the costs of moving more easily.
• Strong future orientation (i.e., lower discount rate): People who think of life a few years ahead are more likely to be willing to migrate than people who engage in hyperbolic discounting.
• Willingness to break ties: People who are heavily attached to their family and home culture would find the move more difficult, whereas people who define themselves less by their present relationships can move more easily.
• Adventurousness, openness to experience, and willingness to take risks

#### Opportunity costs of migration

When people migrate, they leave behind their home, family connections, and a culture that they are more familiar with and may be attached to. What sort of people are willing to leave that behind? Here are some guesses:

• People who have little to lose by leaving are most likely to do so. This could be because they are at high risk of being victimized by violence, are heavily discriminated against by people where they live, are cultural misfits, or cannot find any use of their job skills where they currently live.
• People who have skills or assets that cannot be transported easily and can be leveraged most in the homeland are least likely to leave. For instance, people who are good-looking by the standards of their culture may have the best prospects in their homeland (however, if a huge diaspora from the country already exists, they might be able to marry a member of the diaspora settled elsewhere through a family connection or other introduction). People who inherit a big family business that they can continue running, but aren’t particularly entrepreneurial, may just prefer to stay where they are to keep running the business. People with skills in politics have the best shot at politics in their home country, given that voters everywhere are likely to discriminate in favor of people who were born in the country and fit in culturally and linguistically. People who have completed expensive location-specific qualifications (such as in law) may prefer to stay in the home country because they’d need to re-qualify to practice law in a new country.

Note that there’s a contradiction of sorts between the little to lose criterion (which suggests that poor people may be more keen to migrate) and the observation that wealthier people can more easily afford to migrate. We’ll talk more about this later.

#### Benefits of migration

Migration generates huge benefits for some people, and scant benefits for others. The main benefit of migration from lower-productivity regions to higher-productivity regions is the place premium: one can earn more with the same skills simply by migrating to a new country.

The following attributes predict the benefits of migration:

• Larger absolute wage gains predict migration. Highly skilled individuals, who command high incomes in general, are likely to have large absolute wage gains.
• Larger proportional wage gains predict migration. Increasing one’s income from $1000/year to$10,000/year looks a lot more attractive than increasing one’s income from $30,000/year to$40,000/year.
• Greater knowledge of, affinity for, or ability to learn, the language, customs, and culture of the new place predicts more migration.
• Greater ideological or political affinity with the place they’re moving to (see Ilya Somin’s blog post on the subject).
• Presence of diasporas from the source country in the target country can make migration more attractive. This is part of the diaspora dynamics model developed by Paul Collier.
• Other geographical and health-related considerations could play a role. For instance, I’ve been told that in the 19th/20th century US there was a wave of migrants with lung diseases to the southwest to benefit from the dry air there. This was intranational migration, but presumably there could be international migration for similar reasons under open borders. The selection effects here are unclear, for instance, it may be that emigration of the unhealthy makes it such that the people who stay on in inhospitable climates are unusually healthy and fit.

#### Migration for one’s children

In my blog post on whether there might be too much or too little migration, I talked about how the costs of migration are borne by the migrant, but the benefits are shared by the descendants. I had noted at the time that, because migrants may not fully take into account the benefits to their descendants (even though they care somewhat about their descendants) this might lead to too little migration.

I want to bring up the same point, but with a focus on selectivity rather than raw quantity. People who strongly care for the future of their children and later descendants (including unborn descendants) are more likely to be willing to migrate. This probably selects for two things:

• Strong future orientation (we already talked about this in the context of overcoming the costs of migration, but it takes on added importance if one is thinking of one’s children or grandchildren, particularly the unborn ones).
• Greater love or concern for one’s future family. Note that this is in some tension with the fact that migrants are generally more willing to break ties with their existing families in order to migrate.

I’m planning to do a post on how migration can be considered a sacrifice for future generations, where I’ll explore this in more detail.

#### Selectivity of migration on income and wealth

The a priori considerations provided above paint a mixed picture of the role that income and wealth play. The following emerge:

• Higher wealth allows people to fund their move more easily.
• On the other hand, less wealth means people have less to lose and are more desperate to migrate.
• Huge wage gains attract more migration. But huge wage gains in absolute terms are linked to higher incomes, whereas huge wage gains in proportional terms are linked to lower incomes.
• Higher wealth may be correlated with other traits that predict greater or lesser ability to migrate. This is particularly the case for self-acquired wealth, but might also apply for inherited wealth to the extent that parental wealth correlates with parental attributes and via that with the person’s attributes.

As noted above, the nature of the income and wealth pattern may matter more than the amount. People whose income and wealth is heavily tied to their current location are likely to stay, whereas those whose income and wealth are tied to transportable skills or assets are more likely to move to places where their skills and assets can be best used to earn more.

One example of a “wealthy with little to lose” combination is (relatively) wealthy members of minority groups that are forcefully evicted as path of ethnic cleansing, or anticipate that this will happen. This was the case with Indians in Uganda, businessmen who found themselves on the wrong side of the border in the runup to the Partition of India, Tamils in Sri Lanka, and many others. Market-dominant minorities may in general fear hostile political environments and may be eager to leave when populist political parties or opinions are ascendant.

#### Adaptation to migration liberalization and marginal migration

For simplicity, the above analysis considers the no-migration scenario as one extreme. It can be adapted to a comparison of liberalizing an existing migration policy towards a subpopulation. We would then be interested in the question of marginal migrants: the additional people who can migrate under liberalization. However, there are complications introduced by the distinction between marginal and average: the average performance for the existing set of migrants who migrate under the less liberalized policy may differ from that of the performance for set of migrants who migrate under the more liberalized policy. The difference could be a difference in composition (selection effect) or a difference in treatment.

#### The place premium: an example

The place premium measures the gap (in proportional terms) between (3) and (4), i.e., the treatment effect of migration on migrants. It is one of the few such measures that people have attempted to compute for a wide range of source and target countries; see for instance this working paper by Clemens, Montenegro, and Pritchett that has computed place premium tables on Page 11.

# Migration: how many, what kind, and why it matters

This post is an introduction to a planned series of posts (some by me, some perhaps by others) that explore questions related to how many people might move under various changes that lead towards open borders (locally or globally). The goal of the current post is to explain why I consider the question extremely important. A subsequent post will take a somewhat opposite stand: namely, try to sketch a case for open borders that is independent of how many people might move. Later posts will look at specific policy changes, some of them realistic and others less so, and estimates of what might happen under these. Another area I plan to explore is the question of what the most critical bottlenecks are to large-scale migration (the most obvious candidates are housing and infrastructure) and what limits they set on migration rates.

A while back, I wrote a blog post critical of what I called “economic determinism”: the idea that migration flows are determined completely by economic conditions and that legal barriers to migration have practically zero effect on the magnitudes of migration flows. There are factors other than economic conditions and legal barriers to consider as well, of course: factors such as cultural connections between the sending and receiving country. Alvaro Vargas Llosa’s recent book Global Crossings: Immigration, Civilization, and America drove this point home for me. So, I guess the position I am broadly critical of could be expanded beyond economic determinism to what I might call “restriction irrelevantism”: the idea that restrictions imposed by nation-state governments on migration are largely irrelevant in terms of their effect on the magnitude and nature of migration flows.

Vargas Llosa is definitely not an economic determinist, but whether or not he’s a restriction irrelevantist remains to be seen. This article seemed to suggest that he might be, but op-eds tend to be oversimplifications, and his book, which I haven’t completed reading, may offer a more nuanced picture. I was nonetheless somewhat disappointed by the fact that Chapter 3 of the book, titled “Why They Move” and otherwise excellent at considering the motivators for migration, gave short shrift to the idea that different degrees of restrictionism in different target countries might significantly affect people’s decision of whether or where to migrate.

In any case, this blog post is not about the somewhat extreme position of restriction irrelevantism, which may or may not have real proponents. The majority of proponents and opponents of open borders do not subscribe to restriction irrelevantism. Rather, I think there’d be general agreement that millions more would move, temporarily or permanently, under open borders. But “millions” is a vague term. It could range from an extra five million people over the next two decades to an extra 100 million migrants (many of them temporary) within 2-3 years of global open borders (the main data for how many would move under open borders in terms of the stated preferences of potential migrants are the polling data on migration, which suggest that over a billion people want to go to other countries temporarily or permanently, and about 500-700 million people think they would make long-term moves if they were allowed to). One could come up with a fairly diverse (albeit less so) range of estimates for the number of people who might move under a more targeted open borders regime. For instance, if the United States announced open borders for Haiti (population about 10 million), one might envision a scenario of anything between 2 million people moving to the United States over the next year to a roughly equal number moving to the United States over the next two decades.

The closer the proposed change is to the status quo, the less likely the range of disagreement, but since we are talking here about relatively radical ideas such as open borders, there could be considerable divergence of opinion.

Closely related to the question of how many is the question of who. Many arguments offered by open borders advocates rely on the crucial idea that migrants self-select, i.e., it is not all that easy to migrate to a new land, and therefore migrants are not representative of the populations they hail from, but rather, are selected for positive qualities. As BK has pointed out in the comments (see for instance here and here) you can’t have your cake and eat it too for selectivity: if your estimate says that 25% of the population from region A will move under open borders, you can’t assume that the average migrant who moves will be selected to be in the top 1% of people from region A.

While the precise economics behind double world GDP estimates tends to be complicated, an important point is that all the estimates of huge economic gains also predict that this happens through large numbers of people moving. If, in fact, large numbers of people do not move, then at any rate these specific estimates are not applicable (there may be other mechanisms by which world GDP might increase considerably, such as innovation, but at any rate the specific estimation exercises of the papers would be flawed if very few people moved). For instance, in his blog post about John Kennan’s paper on Open Borders, Nathan Smith writes:

In predicting the volume of migration, Kennan does not assume that humans are strict homini economici who will go wherever they can earn the most. He writes:

One might initially expect that in a world with open borders, everyone would move to the most productive location. But this ignores the strong attachment to home locations that is evident in the data.

He takes this into account by making the migration decision probabilistic, such that the proportion of people who stay in a country is the same as the proportion of the rich-country wage that is paid in that country. For example, if there are open borders between the US and Puerto Rico, and Puerto Rican wages are 2/3 of those in the US, then 2/3 of Puerto Rican adults would stay in Puerto Rico. This roughly fits the data in that particular case, but there is no theoretical motivation for that particular functional form. Relative to a homo economicus model in which everyone who could earn more elsewhere migrated, this assumption causes Kennan to understate the economic benefits of open borders. On the other hand, it also makes Kennan’s version of open borders less scary than it would be if all who stood to gain economically from migration migrated.

This still posits a large number of people who’d move under open borders. Nathan writes later (emphasis mine):

Now, two big things we would like to know about open borders are (a) how many people would move, and (b) how much would world GDP actually increase. If I’m not mistaken, Kennan could easily derive estimates of these things from his model. But he doesn’t. He doesn’t tell us how world GDP would rise under open borders, in the short or the long run. He doesn’t tell us how many people would move, or where they would come from. I think Kennan’s model implies a short-run increase in world GDP of about 65%, and I’m pretty sure in the long run world GDP would double. Since the increase in the effective labor supply comes from growth in the populations of rich countries where labor productivity is high, I think Kennan’s model implies that rich countries’ populations would more than double due to immigration under open borders.

Another related concern is swamping. One of the main concerns of people ranging from hardcore restrictionists to moderate pro-immigrationers and even some who identify as being pro-open borders is that true open borders would lead to very large numbers of people moving over short time periods in a manner that would strain housing, electricity, water supplies, and other infrastructure in the countries receiving the immigrants. The typical response is to point out that (i) borders can be opened somewhat gradually to minimize the possibility of an immediate flood of people (see here for instance), and (ii) in any case, migration flows will tend to be self-regulating and people are likely to plan ahead at least somewhat before making a big move. Evaluating the legitimacy of swamping as a concern is part of the reason why it’s important to get a handle on how many might move under migration regimes that move the needle considerably towards open borders.

Finally, in addition to the direct relevance of understanding migration counts and selectivity, making correct predictions, or at any rate, refraining from making laughably wrong predictions, can help build one’s credibility as an advocate or analyst of migration regimes in the eyes of others approaching the matter from the outside view.