Editors' Summary

An important feature of globalization is the increasing cross-national integration of labor markets. Yet there is little consensus on the implications of that integration, or on the costs and benefits for the many very different groups involved. While there is agreement—at least among most economists—that there are likely to be aggregate welfare gains from increased integration, it is clear that there are losers as well as winners in both developed and developing countries. For example, politically contentious debates about the effects of immigration on the wages of low-skilled workers have proliferated in the advanced industrial economies while poor developing countries have become embroiled in equally contentious debates about the effects of out-migration of skilled workers on their human capital base. Untangling the myriad effects is made even more complex by intermediate arrangements, such as the offshoring of various productive activities by developed country firms to emerging-market economies. This creates new opportunities for skilled workers in the latter, but at the same time offshoring may alter employment opportunities for skilled workers in the advanced economies, and the wage distributions in both.

This ninth issue of the Brookings Trade Forum brought together some of the foremost experts on migration, representing diverse perspectives and backgrounds. New research commissioned for each session launched an interrelated series of lively discussions during the conference, held on May 11 and 12, 2006. The objective was not to attempt to reach consensus, but to broaden and deepen our understanding of the extent and implications of the integration of global labor markets. Thus the forum addressed a wide range of topics—from the welfare effects of immigration on labor markets in both developing and developed economies, to the relationship between education systems in sending countries and labor market outcomes in recipient countries, to the merits and demerits of proposals that would drastically reduce restrictions against cross-border labor migration.

Despite the wide range of topics, a number of themes emerged from the analyses. We highlight four. Perhaps the most obvious was the difficulty in drawing general conclusions about the welfare effects of global labor market integration. Various papers and discussions highlighted some of the many critical mediating factors. These include the skill set of the particular group(s) under discussion, the labor market composition in the recipient countries, the relative returns to different types of labor in the sending and receiving countries, the nature of the contractual arrangements relevant for immigrants' work, and more general macroeconomic and financial market trends.

A second theme was that the investments that developing countries make in higher education are no guarantee of retaining their best and brightest. Indeed those very investments may increase the likelihood of out-migration, particularly when the returns to skilled labor are much lower in developing than in the advanced economies.

Third, if international labor markets were more flexible, participants stressed that cross-border labor mobility would likely skyrocket relative to current levels—even if that flexibility entailed only temporary migration. On balance, that increased mobility would have positive effects for poverty reduction worldwide, but its effects on particular nations and on recipient country labor markets would be more mixed. Finally, the discussion made quite clear that, while the economic effects of proposals to increase international labor mobility are themselves difficult enough to measure, the related questions of political rights and citizenship for temporary workers are daunting and have implications for international as well as national norms and standards.

This volume presents the revised papers, invited commentary, and general discussions from the conference. One paper in the volume explicitly examines flows of skilled migrants across countries and how such flows are affected by education investments in the sending countries and by differential returns to skilled labor across countries. Another focuses on the evolution of wage dynamics during development and how those dynamics are affected by global labor market integration. A third paper examines mobility between formal- and informal-sector jobs in emerging market and transition economies and how those trends are affected by the nature of each country's integration into the global economy. Two papers focus explicitly on the potential effects...