Australia’s Pacific Seasonal Worker Pilot Scheme: Why Has Take-Up Been So Low?

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The Australian Government introduced the Pacific Seasonal Worker Pilot Scheme (PSWPS) in 2008 to allow Pacific Islanders to fill seasonal labour shortages in the horticulture industry, and announced in December 2011 that the scheme would be made permanent. Take-up of the scheme is increasing but has been very low. As of the end of March 2012, only 1,100 PSWPS workers have arrived since the scheme’s commencement. This study tries to explain why the PSWPS has not employed more Pacific workers. It distinguishes between different hypotheses that could explain the poor outcome, and uses quantitative and qualitative analysis to test each hypothesis, including a survey of growers. The study finds a number of reasons for the low take-up. Growers are largely satisfied with their current labour supply, in terms of both quantity and quality: 93 percent of growers interviewed said they had no trouble finding labour, and 81 percent were satisfied with the quality of their existing labour force. The scheme is not well known: half the growers surveyed had simply not heard of the scheme, and most of those who had lacked information about it. The scheme also suffers from perceptions of high levels of risk and costs, including excessive red tape. Despite its slow start, PSWPS might still succeed on the basis of the productivity gains it has already shown it can deliver. But this is by no means assured: even growers who are unhappy with their current labour supply arrangements are reluctant to try the PSWPS. For the scheme to expand, the Australian Government will need to promote the scheme much more vigorously, and reduce the scheme’s financial and compliance costs. The Government also needs to attend to illegal horticultural labour practices, and tackle the booming working holiday visa category. Most growers now rely mainly on backpackers, and their numbers have increased rapidly in recent years: we estimate the number of backpackers working on farms increased from 13,000 in 2001-02 to 37,000 in 2007-08. In particular, the special preference which horticulture receives under the working holiday visa category should be removed. The policy challenges involved in making the PSWPS work should not be underestimated. Other avenues should also be explored for promoting Pacific migration, including adoption of New Zealand’s quota-based Pacific permanent migration schemes.

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... In addition to the longer minimum work guarantee, several other differences between the two schemes are likely to have made the PSWPS relatively more expensive for employers in Australia compared to the RSE for employers in New Zealand (Hay & Howes 2012). Initially, approved employers had to be labour-hire companies rather than growers, while the RSE was agnostic as to whether growers or contractors employed workers. ...
... Initially, approved employers had to be labour-hire companies rather than growers, while the RSE was agnostic as to whether growers or contractors employed workers. Another source of relatively higher costs was red tape and compliance; while not easily quantified this was noted as a deterrent by many employers interviewed by Hay and Howes (2012), especially the market testing for whether local labour was available. The small size of the PSWPS also contributed to higher costs in two ways; many employers were simply unaware of the scheme so there was an information cost, and because it was just a pilot with no assurance that it would continue there was risk for employers investing in it. ...
... Perhaps the most important factor in making PSWPS a relatively costly source of labour compared with the RSE is the much greater reliance on backpackers by the Australian horticultural industry. The final factor considered by Hay and Howes (2012) is that seasonal work in Australia may not be attractive to Pacific workers because of unfavourable tax rules and remittance costs, compared with the situation in New Zealand-although they consider the labour demand side explanations far more important than any supply side explanations. ...
Seasonal and temporary migration programs are widely used around the world, yet there is scant evidence as to their development impacts. Absent such evidence, it is difficult to evaluate whether the proliferation of temporary worker programs in recent years is a useful development. This article reviews studies that attempt to measure impacts of seasonal and temporary migration with a particular focus on evidence from the Pacific and Southeast Asia. © 2014 Asia and the Pacific Policy Studies published by Wiley Publishing Asia Pty Ltd and Crawford School of Public Policy at The Australian National University.
... The composition of the harvest workforce has certainly shifted, largely in line with increasing flows of TMWs, but the overall quantum of labour supply each year is large and seems sufficient for grower needs. Direct results from recent grower surveys suggest that only a small minority of horticultural employers experiences difficulty in recruiting seasonal workers (Doyle and Howes 2015;Dufty et al. 2019;Hay and Howes 2012;Howe et al. 2017;Valle et al. 2017). Perhaps the most startling counter to common claims of labour shortage emerges from academic studies, supported by reports from enforcement agencies, unions and the media, which document mistreatment of seasonal workers, starting with effective hourly wage rates that fall below -sometimes well below -the legal award minimum (Berg and Farbenblum 2017;FWO 2018;Howe et al. 2019;MWTF 2019;Underhill and Rimmer 2016). ...
... Other grower surveys look specifically at recruitment for seasonal labour. The first two were prompted by concern about the low take-up of the SWP: i) a 2011 survey of 183 growers + 8 Approved Employers (Hay and Howes 2012); and ii) a 2014 survey of 217 employers (Doyle and Howes 2015). In addition, we can use a survey in 2016 of 252 vegetable growers who had hired or paid pickers, packers or graders in the previous five years. ...
... Other reasons for the slow uptake during the pilot phase of the PSWPS are discussed by Hay and Howes (2012) and include greater availability of low-cost substitutes in Australia, such as illegal migrants and working holidaymakers. Curtain et al. (2018) also note that the RSE is more employer driven. ...
... Even though the income gains for households supplying workers to the Australian SWP scheme were the same order of magnitude as for those supplying workers to New Zealand's RSE scheme (between 30% and 40% compared with similar households not supplying workers), aggregate gains were just 3% of those for the RSE program at that time because of the very small scale of Australia's scheme. Notably, during the multiyear pilot of the Australian scheme, available spaces were undersubscribed (Hay and Howes 2012). However, substantial changes were announced in June 2015, with the SWP becoming an uncapped scheme and expanding beyond the original focus on horticulture to include the aquaculture, cane, and cotton sectors within the broader agricultural industry. ...
The Pacific islands have weak economic growth and limited structural change compared to the rest of developing Asia. Remoteness and low economic density are two causes. To mitigate these constraints, bilateral arrangements with Australia and New Zealand let Pacific workers seasonally migrate to access higher-paying, more dynamic labor markets. Managed circular schemes are designed to benefit employers in labor-intensive sectors like horticulture, Pacific workers with limited employment opportunities in their own countries, and the communities providing workers. Several studies show large, positive impacts, but more general development impacts have been harder to find. Likewise, clear quantitative evidence of positive impacts in host countries has been hard to obtain. In this paper, we review the main seasonal labor mobility schemes in the Pacific and provide new evidence on community-level and aggregate impacts.
... Both Australia and NZ established such schemes in the mid-2000s. 2 These schemes have been analysed separately (see Hay & Howes, 2012, Doyle & Howes, 2015, and Howe, Reilly, van der Broek, & Wright, 2017, on Australia, and Bedford, 2013, and Gibson & McKenzie, 2014, but their comparative performance has only been analysed to date in a presentation and blog post by Curtain (2015Curtain ( , 2016, on which this paper builds. ...
... Although the growth has moderated and even turned negative in recent years due to a fall in the number of backpackers coming to Australia, the absolute number of backpackers applying for a second-year visa has remained large (Table 2). Hay and Howes (2012), in their nationwide survey of horticultural employers in Australia, found that 73% of growers report that backpackers are their main source of labour. Doyle and Howes (2015), in a second survey of horticultural employers, found that 46% of growers reported that backpackers are their main source. ...
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“Crowding out” is a widely accepted claim in migration analysis, which posits that the preference of profit‐maximising employers for irregular and minimally regulated migrants overregulated alternatives will undermine, if not condemn to failure, well‐regulated temporary migration schemes. In this paper, we test the crowding out hypothesis by examining the experience with well‐regulated seasonal migrant worker programs in the horticultural sectors of Australia and New Zealand. This experience, which in both countries has involved recruitment of workers from the Pacific Islands, has been divergent, despite the two programs being similar in design. Our findings suggest that the relative attractiveness of regulated and unregulated migrant labour sources depends on a range of factors, including the export orientation of the sector, the costs of collective action and regulation, differences in policy design and implementation, and external factors. Depending on industry and economy‐wide characteristics, quality and reputational benefits for employers can offset the cost of regulation.
... Aujourd'hui, les véritables enjeux de l'intégration régionale dans le Pacifique n'ont pas été traités. Ni l'ouverture à la concurrence des secteurs du tourisme, services professionnels et financiers, ni la libre circulation des travailleurs temporaires n'ont pu faire consensus pour être insérées dans l'architecture de l'OMC (Hay, Howes, 2012 ...
L’objectif de cette thèse est d’apporter une contribution sur les perspectives d’intégration régionale des territoires français du Pacifique dans le contexte international actuel, et d’identifier plus particulièrement les potentialités de développement d’activités sur les marchés extérieurs. L’émancipation des collectivités françaises en Océanie ne peut se résumer à leur éradication de la liste des dix-sept territoires à décoloniser de l’Organisation des Nations Unies (ONU). Plus généralement, l’insertion dans les flux du commerce international des îles de moins d’un million d’habitants est au cœur des enjeux du développement insulaire. Ainsi, nous tenterons de savoir si la représentation de référence des économies du Pacifique, MIRAB (Migration, Remittances, Aid, Bureaucracy), répond toujours aux défis apportés par la mondialisation. En effet, le système commercial multilatéral connaît une mutation profonde et semble engagé dans un morcellement régional de ses sphères d’influence. Depuis le début des années 2000, l’initiative des accords Pacific Island Countries Trade Agreement (PICTA) et Pacific Agreement on Closer Economic Relations (PACER) apparaît comme la première étape pour la construction d’un marché régional unique dans le Pacifique. L’Océanie compte sept millions de consommateurs répartis sur un tiers de la surface du globe. Mais l’éloignement, le faible degré d’ouverture et l’hétérogénéité des îles du Pacifique influent directement sur les politiques commerciales. En sus, en Nouvelle-Calédonie comme en Polynésie française plus de 97% des entreprises ont moins de 10 salariés. Comme dans la majorité des îles d’Océanie, le modèle économique n’est orienté que vers le marché intérieur et présente peu de compétences pour l’export. Dans ce contexte, les territoires français sont tous deux référencés comme l’un des 34 « hotspot » de la biodiversité ; leurs écosystèmes sont parmi les plus diversifiés au monde. Fort de cet avantage comparatif, la valorisation de la faune et la flore endémiques peut néanmoins prendre différentes formes : l’agriculture, le tourisme, l’extraction des ressources, la recherche scientifique. Nous tenterons de définir l’exploitation du patrimoine naturel la plus appropriée dans une logique de développement durable.
... Maybe the whole lot of them (Howes and Berry, 2012). Hay and Howes' (2012) study analyzing the low take-up rate of the Australian scheme found that undocumented labor was an important factor in hindering its success. Only 12 percent of the growers that agreed to answer a question concerning undocumented labor denied using illegal labor. ...
The employment of foreign seasonal workers is often advocated as a win–win situation for both employers and workers, as labor shortages can be filled and at the same time foreign workers are able to access labor opportunities. However, these schemes are also being criticized for being prone to exploiting migrants as cheap labor without granting them sufficient rights. This article analyzes the impact of seasonal worker schemes in Australia and New Zealand, researching under what conditions these schemes constitute a win–win situation. This article will first outline the main features of the seasonal worker schemes in New Zealand and Australia. Subsequent sections will cover social protection rights, the characteristics of relevant agricultural industries and the interests of employers. The article concludes with an analysis of critical aspects that can be considered as good practice.
... Of the 2500 places that were available between 2008 and 2012 only 1, 633 visas were issued (65 %). Tonga sent by far the biggest numbers of unskilled workers (81.5 % of the visas issued under this programme) followed by Vanuatu (7.2 %) (AusAID 2013; see also Hay and Howes 2012). The RSE Scheme on the other side had coverage of 85-100 % since it has been introduced in 2007 ( Doyle and Howes 2015). ...
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The risks, pressures and threats on Small Island Developing States (SIDS) of the Pacific from climate change are often perceived by outsiders as overwhelming, both what is visible already now and what is predicted for the future. Particularly low-lying atoll countries are at risk of becoming uninhabitable. People in these islands may have to prepare for a life away from their homes and migrate to places where survival is feasible and where life in dignity is possible. The removal of obstacles to the mobility of people has been seen as an important step to economic and social development. Mobility helps to balance labour shortages, transfer skills and generate remittances. Successful mobility helps also to adapt to climate risks. Moving away means much more than just finding a country and a piece of land where one can settle. Livelihood, legal and social recognition and integration relate to dignity. From the perspective of receiving countries greater acceptance depends on migrants’ skills and how easy they can integrate in labour markets and society. To facilitate this institutional changes as well as bi- and multilateral agreements are needed to enable concrete measures, but also to show political will and generate trust among the weakest in this challenge—the migrants. Recent negotiations concerning labour mobility, unskilled and skilled, temporary and permanent, do not relate directly to climate change adaptation. Favourable outcomes, however, can provide opportunities to SIDS in the Pacific that strengthen adaptive capacities.
... Whereas studies that compare seasonal worker programmes in the United States and Canada with those in Europe have been undertaken, no major comparative study has been conducted between France, Germany and the recent temporary foreign worker programmes of the Pacific (Martin, 2007). A significant number of research papers has analysed specific aspects of individual schemes, such as the development impact of the Recognised Seasonal Employer (RSE) scheme (Gibson et al., 2008;Ramasamy et al., 2008;Gibson and McKenzie, 2010;McKenzie and Gibson, 2010), the low take-up of the Australian pilot scheme (Hay and Howes, 2012), the protection of Pacific seasonal workers in Australia (MacDermott and Opeskin, 2010), and even the differences and similarities between the Australian and New Zealand scheme. But no major comparison has been conducted between Australia and New Zealand in contrast to France and Germany. ...
The employment of foreign seasonal workers is often advocated for filling labour shortages, but at the same time criticised for being prone to exploiting migrants as cheap labour without granting them sufficient protection. The question of social protection rights of seasonal workers thus seems to be a crucial aspect in determining the success of seasonal worker schemes. This article analyses seasonal worker regulations in Australia, New Zealand, Germany and France. First, the level of protection international law provisions have set in place is examined. Second, the social security and work-related rights the four countries grant their seasonal workers are reviewed. Third, this article draws upon soft law, and legally non-binding or not widely ratified provisions in order to determine elements of a comprehensive set of social protection rights for seasonal workers. In conclusion, the practice of making social security contributions for seasonal workers mandatory without at the same time enabling them to benefit from these contributions is criticised. Therefore, it is recommended that a best practice model should provide for equal treatment with nationals in the area of work-related rights but make social security contributions either optional or shorten the qualifying periods, thus enabling workers to benefit from these services.
... WHMs have been described as 'the backbone of the harvest labour supply' (Hay and Howes, 2012: 26; see also Tan and Lester, 2012;Underhill and Rimmer, 2016). Up until 2018, the WHM visa allowed migrants aged between 18 and 30 years from 42 countries to extend their visa for a second year having worked in regional Australia for 88 days. ...
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The migration status of temporary migrant workers is often presented as a major determinant of labour rights and worker vulnerabilities. Using a sequential mixed method approach this article interrogates this proposition to examine the factors exacerbating temporary migrant worker exploitation within the Australian horticulture industry. The article finds that temporary migrants’ access to labour rights are shaped by their migration status. However, in contrast to prevalent assumptions, visa conditions play a preliminary, rather than a deterministic, role in this vulnerability. The article argues that notwithstanding the considerable links between vulnerability and migration status, changes in the political economy of Australian horticulture towards neoliberal or ‘pro-market governance’ arrangements have been central drivers of worker vulnerability. It focuses on three manifestations of these arrangements – the intensification of supply chain pressures, the emergence of labour market intermediaries, and the reduced presence of trade unions – as critical actors shaping temporary migrant worker agency.
The working holiday scheme of New Zealand provides young Chinese with a unique opportunity to have a prolonged work or study and travel experience in New Zealand. Until September 2015, New Zealand was the only working holiday destination for young Chinese and more recently only New Zealand and Australia offer this scheme to young Chinese. With the increasing interest in long-term backpacking, Chinese youth have chosen working holidays as their way to experi- ence the world. The question is thus raised as to why it is that Chinese youth chose working holidays among different options and moreover, what affects their decision to embark on working holidays. This study explores and presents a thematic analysis of thirty-four woking holiday makers (WHMs) from Mainland China. Three organizing themes, namely escapism, cost efficiency and timing, are identified and dis- cussed through consideration of cultural and social influences. The findings of this study facilitate the understanding of this growing cohort of Chinese WHMs. With the possibility of more countries initiat- ing similar schemes for young Chinese, implications and future research directions are also discussed.
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Technical Report
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Temporary migration regimes have become increasingly popular in recent years and seasonal worker regulations have been advocated for having the potential to influence the development impact in the countries of origin. However, the exact parameters influencing the relationship between seasonal migration and development often remain unclear. This article conducts a comparative analysis of seasonal worker regulations across four countries by examining agricultural seasonal worker regulations in similar settings (France compared to Germany, and Australia compared to New Zealand) as well as in different settings (France and Germany compared to Australia and New Zealand). The result of this comparison suggests that the development impact is mostly influenced by the selection of new and returning workers, the amount of average earrings, the utilisation of workers’ income, the form and frequency of remittances, and whether skill acquisition takes place.
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Conference Paper
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Australia's relations with its neighbours in the South Pacific challenge theories of international relations and foreign policy analysis. Most existing analysis eschews an explicitly theoretical approach in favour of empirical description and ‘common sense’ explanations. Yet repeated patterns of interaction suggest that there is scope for developing a more theoretical understanding of the relationships between Australia and the Pacific islands. Moreover, lying at the margins in several dimensions of interstate relations, these relationships test theories and thus provide a basis to delimit or refine them. This article explores three important ways in which theories of international relations and foreign policy analysis and the study of Australia–Pacific island relations can benefit each other. First, Pacific island resistance to the projection of Australian power tests theories about the tactics available to ‘micro-powers’. Australia's frequent reorientation of and regular distraction from its approach to the Pacific islands provide evidence about ‘under-institutionalised’ policy making. Finally, the interaction of Australia's global ‘middle power’ status with its regional dominance challenges ideas of ‘middle power leadership’ and ‘strategic personalities’. These three insights lead to novel hypotheses about the conduct of foreign policy by non-great powers under conditions of extreme asymmetry.
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When the Pacific Islands Forum was established in 1971, regional economic integration was high on the policy agenda. Over the four decades since, a political commitment to regional integration has waxed and waned. This paper explores past and present prospects for economic cooperation through the lens of regional trade negotiations. Into the new millennium, Pacific governments lobbied World Trade Organisation (WTO) members to recognise their trade-related challenges, and sought special treatment in trade negotiations with the EU and with Australia and New Zealand. Despite these efforts, current trade negotiations among all Forum members—to extend the Pacific Agreement on Closer Economic Relations (PACER-Plus)—look unlikely to result in unique measures intended to help Pacific states take advantage of international trade. In this context, consideration should be given to downscaling formal trade negotiations in favour of other regional trade policy initiatives.
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We outline the case for Australia to adopt a ‘New Regional Compact’ focusing on working with its Pacific Island neighbours and Timor‐Leste through improved labour mobility and skilling as a complement to foreign aid and development assistance. We examine the distinctive context and evidence for this approach, related policy settings and possible ways forward. Embedded in this shift is a necessary move from a short‐term focus on temporary migration, skills shortage, and limited‐term aid programs, to long‐term foundational policies that can be a permanent feature of Australia's policy ecosystem and that of its neighbours.
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This is one of the first papers to review comprehensively the design and implementation of New Zealand's managed seasonal labour migration work policy that was implemented in April 2007. The authors include two of the senior policy makers involved in the launching and early administration of the Recognised Seasonal Employer (RSE) work policy (Ramasamy and Krishnan) and two researchers who have been involved in evaluations of the RSE and related New Zealand immigration policies that have relevance for people living in Pacific Island countries. The paper covers the first year of operation of the RSE work policy.
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workers ’ remittances have become an increasingly prominent source of external funding for many developing countries. This chapter examines the relative importance of workers’ remittances as a source of development finance and discusses measures that industrial and developing countries could take to increase remittances. The main messages are: Remittance flows are the second-largest source, behind FDI, of external funding for developing countries. In 2001, workers ’ remittance receipts of developing countries stood at $72.3 billion, much higher than total official flows and private non-FDI flows, and 42 percent of total FDI flows to developing countries (table 7.1). Remittances to low-income countries were larger as a share of GDP and imports than were those to middle income countries. Remittances are also more stable than private capital flows, which often move pro-cyclically, thus raising incomes during booms and depressing them during downturns. By contrast, remittances are less volatile—and may even rise— in response to economic cycles in the recipient country. They are expected to rise significantly in the long term, once sluggish labor markets in G-7 economies recover and new procedures for scrutinizing international travelers become routine. Remittances are often invested by the recipients, particularly in countries with sound economic policies. Improvements in policies and relaxation of foreign exchange controls in the 1990s may have encouraged the use of remittances for investment. By strengthening financial-sector infrastructure and facilitating international travel, countries could increase remittance flows, thereby bringing more funds into formal channels. The transaction costs of fund transfers often exceed Table 7.1 Remittances received and paid by developing countries in 2001 (billions of dollars) All developing Low-income Lower middle-income Upper middle-income
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Seasonal migration programs are widely used around the world, and are increasingly seen as offering a potential triple-win -- benefiting the migrant, sending country, and receiving country. Yet there is a dearth of rigorous evidence as to their development impact, and concerns about whether the time periods involved are too short to realize much in the way of benefits, and whether poorer, less skilled households actually get to participate in such programs. This paper studies the development impacts of a recently introduced seasonal worker program that has been deemed to be best practice. New Zealand's Recognized Seasonal Employer program was launched in 2007 with an explicit focus on development in the Pacific alongside the aim of benefiting employers at home. A multi-year prospective evaluation allows measurement of the impact of participation in this program on households and communities in Tonga and Vanuatu. Using a matched difference-in-differences analysis based on detailed surveys fielded before, during, and after participation, the authors find that the Recognized Seasonal Employer program has indeed had largely positive development impacts. It has increased income and consumption of households, allowed households to purchase more durable goods, increased the subjective standard of living, and had additional benefits at the community level. It also increased child schooling in Tonga. This should rank it among the most effective development policies evaluated to date. The policy was designed as a best practice example based on lessons elsewhere, and now should serve as a model for other countries to follow.
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In 2008 the Australian Government announced a new labour mobility scheme for Pacific workers, with the objective of meeting seasonal demand for low skilled labour in the horticulture industry and promoting economic development in Pacific Island Countries. Modelled on New Zealand’s Recognised Seasonal Employer scheme, it is a significant departure from Australia’s long-standing preference for permanent migration that is non-discriminatory with respect to the country of origin. Any temporary migration programme that draws a workforce from developing countries has the potential to exploit vulnerable foreign workers, but the long term success of Australia’s pilot program makes it imperative that seasonal workers from the Pacific are not exposed to that danger. This article examines why the responsibility for protecting Pacific workers falls largely on Australia’s regulatory framework governing workplace relations, and how those laws, policies and processes can meet that challenge. Equality laws, occupational health and safety principles, dispute settlement procedures, and trade union involvement all form part of an institutional network that can assist this highly visible scheme to meet the expectations of participants both in Australia and in the Pacific.
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We examine the potential welfare gains and channels of income smoothing for Pacific Island Countries (PICs) and nd that, under full risk sharing overall welfare gains across all PICs (particularly, Kiribati, Palau, and Papua New Guinea) are at desirable levels. However, for Australia, the potential welfare gain from risk sharing is almost similar to the gain it obtains if Australia attains full risk sharing with the rest of the OECD countries or with New Zealand alone. We also break down output using the framework of Sorensen and Yosha (1998) to quantify the extent and channels of risk sharing across PICs. For PICs, income-smoothing channels (net factor income and current transfers) play a significant role in buffering the output shock compared to the performance of those channels on smoothing the output shock for OECD countries. Domestic savings also smooth a fair portion of shocks to output, but the extent is much lower compared to that of OECD countries. Further, we analyze the effect of remittances and foreign aid on income smoothing for the PICs exclud- ing Australia and New Zealand. Income smoothing via remittances is highly volatile and significant in recent years, while foreign aid seems to be a stronger and more stable channel for smoothing domestic output shocks for PICs.
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Do remittances sent by overseas migrants serve as insurance for recipient households? In a study of how remittances from overseas respond to income shocks experienced by Philippine households, changes in income are found to lead to changes in remittances in the opposite direction, consistent with an insurance motivation. Roughly 60 percent of declines in household income are replaced by remittance inflows from overseas. Because household income and remittances are jointly determined, rainfall shocks are used as instrumental variables for income changes. The hypothesis cannot be rejected that consumption in households with migrant members is unchanged in response to income shocks, whereas consumption responds strongly to income shocks in households without migrants. Copyright The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail:, Oxford University Press.
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This paper analyses the temporary migration decision of workers who are credit constrained. As observed with data on Tunisia, migrants who invest after returning to their country have accumulated more savings and stayed longer abroad than salaried return migrants. To capture these features, we analyse the optimal migration duration and occupational choice of workers using a life-cycle maximisation model. An econometric test enables us to evaluate the extend to which liquidity constraints affect self-employment of returned migrants. The model predicts unexpected effects of policy measures on migration behaviour. In particular, migrants who receive funds to invest after return do not necessarily return earlier. Copyright 2004, Oxford University Press.
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This chapter reviews the recent theoretical and empirical economic literature on migrants' remittances. It is divided between a microeconomic section on the determinants of remittances and a macroeconomic section on their growth effects. At the micro level we first present in a fully harmonized framework the various motivations to remit described so far in the literature. We show that models based on different motives share many common predictions, making it difficult to implement truly discriminative tests in the absence of sufficiently detailed data on migrants and receiving households' characteristics and on the timing of remittances. The results from selected empirical studies show that a mixture of individualistic and familial motives explains the likelihood and size of remittances. At the macro level we first briefly review the standard (Keynesian) and the trade-theoretic literature on the short-run impact of remittances. We then use an endogenous growth framework to describe the growth potential of remittances and present the evidence for different growth channels. We then explore the relationship between remittances and inequality. This relationship appears to be non-monotonic. This is consistent with different theoretical arguments regarding the role of migration networks and/or the dynamics of wealth transmission between successive generations.
The classic economic argument in favour of labour migration is that people move in search of higher wages, thus increasing their own productivity.1 However, as indicated by Layard et al. (1992), the decision to migrate also depends on other economic, social and political considerations. Among the economic aspects, migrants may take into account comparative wage levels (actual and expected); comparative unemployment rates and unemployment benefits; the availability of housing; and the cost of migration, which includes travel expenses, information costs, and the psychological cost of leaving friends and family. Weyerbrock (1995) also indicates that political instability and civil war may cause larger emigration flows than economic or demographic pressures.
The Pacific Seasonal Worker Pilot Scheme (PSWPS) signals a new level of engagement between Australia and Pacific island countries and is of major significance for all participating countries. It embodies the ramping up of the globalisation of labour markets, communities and nations in the Pacific region and constitutes international people movement that inevitably will have a transformative impact on labour receiving and sending nations in terms of their social, political and economic structures. This article focuses on the demand side of this relationship, with emphasis on the newly established Australian PSWPS. The article raises questions concerning how, after an overview of New Zealand's Recognised Seasonal Employer (RSE) scheme and the Australian PSWPS, the advent of seasonal emigration from the Pacific will affect, and be affected by, existing employment and labour relations in the Australian horticultural sector. In this context, it examines information about undocumented workers in the Australian horticultural labour market and the degree they are impacting on the success of the pilot scheme. Finally, the article discusses the long-term viability of the pilot, based on a range of stakeholders' perspectives, and identifies some impediments to its expansion in its current form.
This research note presents an analysis of the development impacts of Australia's Pacific Seasonal Worker Pilot Scheme. We estimate the gain per participating household to be approximately A$2600, which is a 39% increase in per-capita annual income in participating households. The aggregate impact to date is small, but the experience of New Zealand's larger programme shows that seasonal worker programmes can potentially have large aggregate effects.
This paper presents evidence suggesting that international migrant remittances generally lead to improved developmental outcomes. Using a cross-section of Mexican municipalities in 2000, I show that increases in the fraction of households receiving international remittances are generally correlated with better schooling and health outcomes and with reductions in some dimensions of poverty. My results take into account the likely endogeneity among migration, remittances, and developmental outcome variables, and they suggest that measures to facilitate remittance flows are desirable.
The central question of this paper concerns the implications of remittance flows for migrants and their origin households in the country of origin. This paper represents the first attempt to present a disaggregated view of international remittance flows using a matched sample of international migrants and their origin families. I investigate two types of remittances: transfers to the home family and savings in the country of origin. The empirical evidence provides support for the altruistic model of transfer behavior. Wealthier origin families tend to receive lower transfers, other things being equal. However, remittances sent to finance origin country investments are positively associated with origin household wealth. The estimation strategy addresses two common problems that arise in investigating remittance behavior: omitted variable bias and the measurement of origin household resources.
If migrants return to their origin countries, two questions arise which are of immediate economic interest for both immigration and emigration country: what determines their optimal migration duration, and what are the activities migrants choose after a return. Little research has been devoted to these two issues. This paper utilises a unique survey data set which records activities of returned migrants. We first illustrate the activities of immigrants after returning. We show that more than half of the returning migrants are economically active after return, and most of them engage in entrepreneurial activities. We then develop a model where migrants decide simultaneously about the optimal migration duration, and their after-return activities. Guided by this model, we specify and estimate an empirical model, where the after-return activity, and the optimal migration duration are simultaneously chosen.
We examine the effect of remittances from abroad on households' schooling decisions using data for El Salvador. Following the massive war-related emigration of the 1980s, remittances became a significant source of household income throughout the 1990s. We use the Cox proportional hazard model to examine the determinants of school attendance. Measuring income from a source that is uncorrelated with parental schooling—remittances—, we find that remittances have a large, significant effect on school retention. We estimate that while household income net of remittances has a small, though significant, impact on the hazard of leaving school in rural and urban areas, remittances have a much larger impact on the hazard of leaving school. In urban areas, the effect of remittances is, at its smallest, 10 times the size of the effect of other income. In rural areas, the effect of remittances is about 2.6 times that of other income. Our finding is of interest in that it suggests that subsidizing school attendance, particularly in poor areas, may have a large impact on school attendance and retention, even if parents have low levels of schooling.
Thesis (Ph. D., Dept. of Economics)--Harvard University, 2003. Includes bibliographical references.
The choice between temporary and permanent migration is today central to the design of migration policies. The authors draw a distinction between the two types of migration on the basis of the associated social cost and the dynamics of learning by migrants. They find that unilateral migration policies are globally inefficient because they lead to too much permanent migration and too little temporary and overall migration. Existing international agreements on labor mobility, such as the World Trade Organization's General Agreement on Trade in Services, have failed to do better because they seek primarily to induce host countries to make commitments to allow entry. Instead, Pareto gains and more liberal migration could be achieved through multilateral agreements that enable host countries to commit to repatriation.
Few studies have examined the impact of international migration and remittances on poverty in a broad cross-section of developing countries. The authors try to fill this gap by constructing a new data set on poverty, international migration, and remittances for 74 low- and middle-income developing countries. Four key findings emerge: 1) International migration-defined as the share of a country's population living abroad-has a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international migrants in a country's population will lead to a 1.9 percent decline in the share of people living in poverty ($1.00 a person a day). 2) Distance to a major labor-receiving region-like the United States or OECD (Europe)-has an important effect on international migration. Developing countries that are located closest to the United States or OECD (Europe) are also those countries withthe highest rates of migration. 3) An inverted U-shaped curve exists between the level of country per capita income and international migration. Developing countries with low or high per capita GDP produce smaller shares of international migrants than do middle-income developing countries. The authors find no evidence that developing countries with higher levels of poverty produce more migrants. Because of considerable travel costs associated with international migration, international migrants come from those income groups which are just above the poverty line in middle-income developing countries. 4) International remittances-defined as the share of remittances in country GDP-have a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international remittances in a country's GDP will lead to a 1.6 percent decline in the share of people living in poverty.
PIP This paper sets forth a procedure for calculating the annual efficiency gains from alternative changes in existing international immigration restrictions and evaluates the impact of wage rate changes on nonmigrating labor. Data on US gross national product (GNP)/capita across countries are used to infer differences in the marginal productivity both between countries and across major world trading areas. The method assumes that the worldwide labor supply is fixed, that full employment occurs in all regions, and that differences in labor's marginal product across regions arise because of barriers to inward mobility of labor in high-wage countries. When these barriers are removed, labor is assumed to be reallocated and efficiency gains occur. Results of the calculations suggest large gains from the removal of global immigration controls which, in most cases, exceed existing worldwide GNP generated in the presence of labor mobility restrictions. A large portion of the gain is accounted for by labor migration between the aggregated rich and poor countries. Over 40% of the total potential gain is realized when only 10% of the wage differential is eliminated, suggesting that small changes in global migration restrictions have large marginal effects. Wage rates increase in labor-losing regions and decline in labor-receiving regions, dramatizing the incentives for labor unions in high-wage countries to oppose liberalization of immigration restrictions. These results suggest large potential worldwide efficiency gains from a move toward an international labor market free of immigration controls. This issue may be far more important to the North-South debate than a focus on initiatives such as commodity price stabilization, relaxation of trade protection, or increased aid flows.
We compare the wages of workers inside the United States to the wages of observably identical workers outside the United States—controlling for country of birth, country of education, years of education, work experience, sex, and ruralurban residence. This is made possible by new and uniquely rich microdata on the wages of over two million individual formal-sector wage-earners in 43 countries. We then use five independent methods to correct these estimates for unobserved differences between the productivity of migrants and non-migrants, as well as for the wage effects of natural barriers to international movement in the absence of policy barriers. We also introduce a selection model to estimate how migrants’ wage gains depend on their position in the distribution of unobserved wage determinants both at the origin and at the destination, as well as the relationship between these positions. For example, in the median wage gap country, a typical Bolivian-born, Bolivianeducated, prime-age urban male formal-sector wage worker with moderate schooling makes 4 times as much in the US as in Bolivia. Following all adjustments for selectivity and compensating differentials we estimate that the wages of a Bolivian worker of equal intrinsic productivity, willing to move, would be higher by a factor of 2.7 solely by working in the United States. While this is the median, this ratio is as high as 8.4 (for Nigeria). We document that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) these gaps imply that imply allowing labor mobility can reduce a given household’s poverty to a much greater degree than most known in situ antipoverty interventions.
[eng] We present a two-sided search model where agents differ by their human capital endowment and where workers of different skill are imperfect substitutes. Then the labor market endogenously divides into disjoint segments and wage inequality will depend on the degree of labor market segmentation. The most important results are : 1) overall wage inequality as well as within-group and between-group inequalities increase with relative human capital inequality ; 2) within-group wage inequality decreases while between-group and overall wage inequalities increase with the efficiency of the search process ; 3) within-group, between-group and overall wage inequalities increase with technological changes. [fre] Immigration et justice sociale. . Cet article est d�di� � la m�moire d'Yves Younes qui nous a quitt�s en mai 1996, et dont les derni�res r�flexions sur l'importance du ph�nom�ne migratoire dans les �tats-Unis des ann�es 1980-1790 m'ont beaucoup influenc�.. L'ouverture des fronti�res entre le Nord et le Sud peut-elle se retourner contre les plus d�favoris�s du monde, c'est-�-dire les non-qualifi�s du Sud ?. Avec deux facteurs de production, les migrations Sud-Nord b�n�ficient tou�jours aux moins qualifi�s du Sud, puisqu'ils y sont le facteur le plus abondant. Mais avec trois facteurs de production (trois niveaux de qualifications, ou deux niveaux et un facteur capital imparfaitement mobile), l'ouverture des fronti�res peut conduire � une baisse du salaire des moins qualifi�s du Sud si leur compl�mentarit� avec le travail tr�s qualifi� ou le capital du Nord est suffisamment faible compar�e � celle des sudistes plus qualifi�s.. Plusieurs �tudes r�centes sugg�rent effectivement que les �lasticit�s de compl�mentarit� chutent brutalement au-del� d'un certain �cart de qualification. Cependant, rien ne prouve que ces effets soient suffisamment forts pour que l'ouverture optimale des fronti�res du point de vue de la justice sociale
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