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Virtuous and Vicious Circles: Theoretical Underpinnings

Figure 10.1 portrays two simple models of the M&D relationship, representing respectively a virtuous and a vicious circle. The virtuous version relies on orthodox economic arguments but exhibits two variants, based in turn on neoclassical and “new” economics of migration. According to neoclassical equilibrium theory, people make rational, well-informed calculations of the costs of, and returns to, migration (Sjaastad 1962). They migrate as individual decision-makers responding to differential wage rates, real incomes, and (un)employment rates in different regions or countries. They move from high-unemployment, low-wage economies to places where wages are significantly higher (sufficiently higher to discount the costs of migration) and jobs are widely available. By transferring labour from a high-supply, low-marginal-productivity country to one which has high demand and high marginal productivity of labour, migration increases aggregate economic welfare and eventually equalizes wage and employment differences through factor-price convergence. An equilibrium is reached, and migration ceases; the system is self-regulating and self-correcting. The developmental effects accrue especially to the destination country, which receives an extra supply of labour to boost growth (Borjas 1995). For the sending country, according to equilibrium theory, incomes should rise as the downward pressure on wages wrought by an over-supply of labour is removed, and other resources—such as land and housing—are reallocated accordingly. The neoclassical model has its own internal economic logic, but is based on many unrealistic assumptions, including “perfect information” and no barriers to migration. It also “assumes away” the social context of families and kinship, and says nothing about integration. Under this model there is no return migration—returnees are simply “failures” who miscalculated the costs and benefits of their migration (Cassarino 2004).

Remittances are rarely mentioned in the neoclassical interpretation of M&D, but they are central to the new economics of labour migration (NELM) model (Taylor 1999). Still essentially an orthodox economic model, NELM shifts focus from the individual to the household and stresses migrants' agency within the family setting. Moreover, migration takes place not just to maximize income from labour but to minimize the risk of “market failures” such as a natural disaster or a collapse in the price of a key product. Under the NELM model, one or more family members migrate (usually those whose labour power is most marketable abroad, such as a young male construction worker or a female domestic worker), leaving others behind to continue the household's business (e.g., a small farm holding). In this way a portfolio of income and subsistence sources is created, cushioning the effects of a possible failure in one of the sources. Remittances are sent to support the residual family in the home country, and may be deployed in a variety of uses: setting up a new enterprise, educating young family members, or responding to an emergency (e.g., a drought or medical bills). Once the target is reached, return migration can take place—hence, under this model returnees are successes, not failures—although other household members may continue the tradition of migration in order to preserve the flow of remittances.

Completely opposite to the neoclassical and NELM visions of M&D is the vicious cycle interpretation. Drawing on Marxist political economy, historicalstructuralism, the Latin American Dependencia School (Frank 1969) and Wallerstein's (1974) world systems theory, this framework sees migration between poor and rich countries as part of the “development of underdevelopment” in the economic periphery. Migrants are the pawns of global capitalism, part of capital's search for a “reserve army” of cheap, exploitable, and expendable labour. Delgado Wise and Márquez Covarrubias (2011) view migration as integral to the reproduction of global and regional inequality and as reinforcing the structures of spatial uneven development. These authors see such labour transfers as forced migration between unequal partners (e.g., Mexico and the USA, Morocco and Europe) bound together in a system of profoundly asymmetric integration. Such migration contributes to the development of the advanced receiving society but impoverishes the already-poor sending country. Under this optic, migration is self-perpetuating, via mechanisms of cumulative causation, not self-correcting to an equilibrium state. Peripheral countries or regions in the global economic and geopolitical system are condemned to remain peripheral, their main function being to supply whatever raw materials (including labour) they have to the countries of the “core”. In this model, remittances and return migration do not feature as exogenous stimuli for development. Remittances are argued to be largely “wasted” on housing and consumer goods, resulting in “modernization without development”, and return migration is said to bring back only the sick, the exhausted, and the retired.

 
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