The Road Out of Serfdom

Kerry Howley | July 23, 2008

What's the largest form of wage discrimination in the world today? To answer that question, Lant Pritchett, Michael Clemens, and Claudia Montenegro have compiled this handy chart for you:

 

Wage gaps between observably identical Nigerian workers in the United States and Nigerian workers in Nigeria (same gender, education, work experience, etc) are... considerable. They swamp the wage gaps between men and women in the US. They swamp the gaps between whites and blacks in the US. Actually, they swamp the wage gaps between whites and blacks in the United States in 1855. For several countries, the effect of border restrictions on the wages of workers of equal productivity "is greater than any form of wage discrimination (gender, race, or ethnicity) that has ever been measured." The labor protectionism that keeps poor workers out of rich countries upholds one of the largest remaining price distortions in any global market.

Who cares? You weren't planning on seeking employment in Nigeria anyway. The upshot is that even a very limited loosening of borders could do enormous, immediate good. No other poverty alleviation policy—microcredit, education, public health interventions, anti-sweatshop activism—compares with a work visa, even a temporary one. The Pritchettarians do the math:

• "Simply allowing one member of a Bangladeshi household to work in the US for one month (for a gain of US$835 in present value) brings a larger increase in earnings to that household than a lifetime of microcredit (for a gain of US$683 in present value)."

• "The cumulative lifetime effect of the anti-sweatshop movement on an Indonesian worker’s earnings could be earned if that person had the chance to work in the US once for a period of about 30 weeks."

• "An additional year of schooling [in Bolovia] is associated with an annual wage gain of $205. The net present value of a lifetime of such additional payments is about $2250.35 which is about 21% of the annual wage gain to a Bolivian working in the US."

The paper is here, and my interview with Lant Pritchett is here. Another classic Pritchett chart can be viewed here.

Via Chris Blattman.