Friday, April 25, 2008

GDP and Immigration

I am often confounded by the tendency to take GDP figures so seriously especially when the resulting figure is the result of very broad aggregates and subject to large errors in calculation. Tim Harford's piece in Slate Magazine reviews a paper that proposes a fascinating approach to GDP. Its implications and conclusions are surprising as well. By showing that emigration from poorer countries raises annual incomes of individuals by as much as 50%, it should provide a sobering fact to those promoting anti-immigration policies. Just ask what it takes to stop a person from raising annual income by that much.

To my mind, it shows that the pay off from relocation is so high that when legal mechanisms are closed off, then people will understandably make desperate moves like using a rickety raft to cross seas or fill up a truck at the risk of suffocation.very strict laws meant to keep immigrants away work to the advantage of smugglers.

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