A Better Way to End Unauthorized Immigration

By Douglas Massey, Miller-McCune.com. Posted January 8, 2009.

In 1978, after a short period of deliberation, EU member states, then known as the European Economic Community, rewarded Spain for its transition to democracy and economic liberalization, entering serious negotiations to specify how it might join the EU as a full member. In doing so, European officials built on their earlier success with Greece, a poorer nation that had already been successfully integrated. Negotiators on both sides had two central aims: They wanted to integrate Spain’s markets with those of northern Europe by specifying institutional, financial and legal changes that Spain would have to make; and they hoped to harmonize Spanish social systems with those in the north by requiring specific reforms in the administration of education, social welfare, criminal justice and employment.

European Union negotiators did not try to make Spain’s social and economic institutions identical to those in northern Europe. Rather, they sought to begin moving them toward convergence.

Before 1986, institutional change in the Spanish economy was slow and incremental, according to data from the Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania. In the decade between Spain’s EU application and its final accession, the country’s "openness index" (defined as the share of gross domestic product devoted to international trade) continued to rise slowly. Following accession, however, structural economic change occurred at a rapid pace, and from 1986 to 2004, the openness index more than doubled. Over this period, the share of workers employed in agriculture fell by roughly two-thirds, the share in services increased by more than 20 percent and the share in industry held fairly steady. These structural transformations were accompanied by major dislocations. Spanish unemployment rose from just 4.4 percent at Franco’s death to peak at 24 percent in 1994 before slowly declining, finally dropping below 10 percent in 2004.

Although income rose after Spain joined the EU, the increase was not fast enough to close the gap with its northern neighbors. In fact, the absolute size of the north-south gap in income -- that is, the gap in gross domestic product per capita -- remained fairly constant until Spain’s application for EU entry. Thereafter, it widened slightly before resuming a pattern of economic growth that was parallel with northern Europe’s.

This income gap ought to have driven migration from Spain into northern Europe, according to a theory of migration long accepted in many political science circles, often called the neoclassical model. Under that theory, as long as a positive wage gap exists, moving costs are small and there is no legal barrier to moving, people have an incentive to migrate.

But the neoclassical theory didn’t describe modern European reality.

In 1954, an average Spaniard earned roughly $4,000 a year, in adjusted terms, while an average northern European earned some $8,000. By moving to the north, the Spaniard had a theoretical possibility of doubling his income -- a real incentive for migration.

In 2004, though, the average Spaniard was making some $21,000 and the northern European roughly $26,000. There was still a wage gap, but the Spaniard couldn’t hypothetically double his income by migrating; the potential $5,000 increase in income represented a much smaller income premium of, very roughly, 25 percent, and a lesser incentive to migrate.

Under the conditions described, neoclassical theory predicts a continuing outflow of migrants from Spain toward higher-income countries, as had happened in the past. During the economic boom years from 1967 to 1973, Spain was sending out around 100,000 temporary and 100,000 permanent emigrants per year, yielding a net outflow of between 100,000 and 150,000 persons per year to destinations in Europe.

The recession of 1974 pushed the outflow to near zero, but after 1977 it rose to between 50,000 and 100,000 persons, a level that continued into the 1980s. The fear that EU membership would unleash a new wave of Spanish emigrants thus had justification both in theory and in experience.

But Spain’s entry into the EU did not increase migration into northern Europe. Instead, during negotiations leading up to Spanish accession, temporary migration began to fall; after EU entry, the number of migrants returning to Spain rose. In 1991, for the first time in history, Spain received more Spaniards than it sent out. The inflow has continued since then, the predictions of neoclassical migration theory notwithstanding.

What happened in Spain is best understood in terms of a model proposed as an alternative to neoclassical economic theory; it is commonly known as the new economics of labor migration. A comprehensive review of studies conducted by me and a panel of distinguished international colleagues has shown that total income is not the only factor driving decisions to migrate. Among other things, research by Oded Stark, an economics professor at the University of Bonn, Germany, and J. Edward Taylor, a professor of resource economics at the University of California, Davis, has shown that people migrate in response to relative incomes. The decision to migrate also appears to be driven more by a lack of access to markets for capital than by geographic differences in expected wages.

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Douglas Massey is the Henry G. Bryant Professor of Sociology and Public Affairs at Princeton University and president of the American Academy of Political and Social Science.

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