ALL ROADS LEAD TO AMERICA: New evidence on transit migration

Blocking direct migration from developing countries to high-income countries, such as the United States, might have many unintended and unforeseen consequences. For example, migration to other OECD countries, such as Canada, which is a close substitute in terms of income opportunities, might increase drastically. What’s more, once the direct path to the United States is blocked, the potential transit route via Canada becomes more valuable, further increasing migration there.

These are among the conclusions of research by Erhan Artuc and Caglar Ozden of the World Bank, published in the July 2018 issue of the Economic Journal. Their study explores the migration paths of the many migrants whose movements involve multiple destinations and transit routes, patterns that have been rarely analysed before now. Among their findings:

• Around 9% of the people who migrated to the United States during the period 2001-12 were living in a country other than their birthplace prior to their arrival.

• While it is widely thought that low-skilled and undocumented migrants are the main groups who follow transit routes to reach their final destinations, transit migration to the United States is actually more common for migrants with tertiary education. Nearly 14% of such migrants did not come directly from their birth countries.

• High-income OECD countries are particularly important transit stops for immigrants. Among the people who were living in Australia, Canada or the UK just prior to their arrival in the United States, over 30% were born in a different country and would already be classified as international migrants. This is not the case with migration from Mexico.

• Linguistic similarity continues to be important for transit migration costs, especially high-skilled migrants. For example, high-skilled Australian migrants in France face a considerably lower cost of migrating to the United States than German migrants in France.

In addition to these patterns, the study identifies the determinants of transit paths for migrants with different education levels and from different origin countries. For example, high-skilled migrants, in contrast to low-skilled migrants, are not significantly affected by additional distance to other destination countries once they are already in the transit country.

A significant implication of the researchers’ analytical approach is that they can identify the ‘option’ value of a transit destination: the ease of movement between a pair of countries affects migration from third countries.

For example, when Poland joined the European Union and its citizens gained access to the internal labour market in Germany, more Belarusian migrants might have decided to move to Poland as they hoped to end up in Germany. This result implies that policies imposed by Germany or Poland will have important implications in shaping global migration patterns.

To explore these ideas further, the researchers simulate certain policy scenarios that highlight the dynamic interactions and spillovers between different migration paths. For example, blocking direct migration from developing countries to an OECD country might significantly increase migration to other high-income countries, both because the latter are close substitutes in terms of income opportunities and they offer a transit path to the former.

In short, in the presence of such dynamic effects, governments need to incorporate the externalities created by their policy actions, especially on their neighbours, via direct and transit migration channels.

‘‘Transit Migration: All Roads Lead to America’ by Erhan Artuc and Caglar Ozden is published in the July 2018 issue of the Economic Journal.