THE OPENNESS-EQUALITY TRADE-OFF: Potential lessons from the Gulf for migration policies in OECD countries

At a time when fights over migration are dividing rich countries and fracturing their politics, a study published in the July 2018 issue of the Economic Journal sheds light on a ‘path not taken’. The analysis by Microsoft and Yale economist Glen Weyl compares the migration policies of the Gulf Cooperation Council (GCC) countries – such as Qatar, Saudi Arabia and the United Arab Emirates – with those adopted by OECD countries.

GCC migration policies have been sharply criticised by human rights groups because migrant workers (mainly from South Asia) often live in harsh conditions and are subject to racial discrimination. But Weyl highlights a key benefit of the GCC system over the OECD model: the former can admit massively more migrants than the latter. By doing so, they do much more per capita to reduce global inequality than OECD countries.

OECD countries typically have roughly one migrant for every ten natives, while some GCC countries nearly reverse this ratio. While life for these migrants can be challenging and rife with abuse, South Asians regularly queue up for a chance to work in the GCC because they typically multiply their income by five times when they work in the Gulf, sending much of this income back to their impoverished families. In some areas of Bangladesh, for example, a majority of income comes from remittances from the Gulf.

Because these migrants are much poorer than the poorest people living in OECD or GCC countries, these GCC policies have significantly reduced global inequality and poverty. Weyl suggests that the potential for improving global equality would be far greater if OECD countries adopted similar policies.

He calculates that if OECD countries adopted policies like those of Kuwait, which has roughly two migrants for every citizen, this would reduce global inequality by a quarter, many times the amount that redistribution within OECD countries reduces inequality.

Yet even the far more modest levels of immigration to OECD countries are causing populist backlash and conflict. How are the GCC countries able to sustain such massive migrant populations?

One factor is that the GCC countries are monarchies and not subject to democratic influence. But allowing migration is widely popular among ordinary citizens. The key, Weyl argues, is that migrants to GCC countries receive a very different social contract than natives do. In fact, the inequality between natives and migrants makes the GCC countries the most internally unequal countries in the world, even as they dramatically reduce global inequality.

This second-class status of migrants means that ordinary natives, and not just migrants or the wealthy, can greatly benefit from migration. GCC natives can employ migrants at low wages by GCC standards for domestic work or profit from sponsoring their visas to work in construction.

This system channels the benefits of migration to ordinary citizens, thereby sustaining popular support for migration. To make this possible, GCC countries have a large police force that disciplines and often denies human rights to migrant workers.

The trade-off illustrated by the GCC-OECD comparison – which Weyl calls the ‘openness-equality trade-off’ – poses challenging questions to citizens of rich countries. Most importantly, is there some way to allow for the benefits of the GCC system (large-scale migration that benefits ordinary natives) without the authoritarian and racist elements of the GCC system?

Weyl concludes the study by suggesting that allowing ordinary citizens to sponsor visas and negotiate a sharing of migration benefits, while maintaining rights protections, might achieve the best of both worlds. This is a proposal he develops more fully as the ‘Visas between Individuals Program’ in his forthcoming book with Eric Posner, Radical Markets: Uprooting Capitalism and Democracy for a Just Society.

The Openness-Equality Trade-off in Global Redistribution’ by Glen Weyl is published in the July 2018 issue of the Economic Journal.