The Place Premium : Wage Differences for Identical Workers Across the US Border

By Michael A. Clemens, C. E. Montenegro, L. Pritchett. 2008

279 citations recorded by the source corpus.

This paper compares 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 rural-urban 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. The paper then uses five independent methods to correct these estimates for unobserved differences and introduces a selection model to estimate how migrants'wage gains depend on their position in the distribution of unobserved wage determinants. Following all adjustments for selectivity and compensating differentials, the authors 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). The paper documents 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 simply allowing labor mobility can reduce a given household's poverty to a much greater degree than most known in situ antipoverty interventions.

Subfields: Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/ea04189c76e4267e01acf7176b50a2f2f8b1d713

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In Sociology and Political Science

Citations in the corpus

Do Poverty Traps Exist? Assessing the Evidence (2014, background): “Clemens, Montenegro, and Pritchett (2008) estimate that a male worker with nine years of education would earn 7.8 times as much working in the United States as in Haiti.”
Does Development Reduce Migration? (2014, background): “While international migration often raises workers’ incomes by hundreds of percent (Clemens, Montenegro, and Pritchett 2008), these benefits occur well into the future.”
Economics and Emigration: Trillion-Dollar Bills on the Sidewalk? (2011, methodology): “9 That fi gure probably overestimates the effect of migration on Haitians’ poverty, since there is evidence of some positive selection of Haitian emigrants on observable and unobservable determinants of earnings (Clemens, Montenegro, and Pritchett, 2008).”
The economics of human trafficking and labour migration: Micro-evidence from Eastern Europe (2010, background): “The large “place premium” in wages between sending and receiving countries is carefully documented in a recent paper by Clemens et al. (2008). fields of criminal intermediation, e.g. drugs and arms trade.”
Context Matters for Size: Why External Validity Claims and Development Practice Don't Mix-Working Paper 336 (2013, unknown): “Clemens, Montenegro, and Pritchett (2008) draw on the I2D2 data to to quantify the enormous differences in average incomes across countries for observationally identical workers along these measured dimensions.”
Why Don't Remittances Appear to Affect Growth? (2014, unknown): “immigrants from Yemen and Cameroon to roughly 5 for immigrants from the Dominican Republic and Morocco (Clemens et al. 2008).”
The Development Impact of a Best Practice Seasonal Worker Policy (2010, unknown): “Second, although the gains to households from this seasonal migration are large, they still pale in comparison to the gains from permanent international migration (Clemens et al., 2008; McKenzie et al., 2010).”
Miserable Migrants? Natural Experiment Evidence on International Migration and Objective and Subjective Well-Being (2012, background): “This earnings wedge is far larger than most international price wedges on goods and capital, making immigration restrictions e of the largest distortions in the global economy (Clemens, Montenegro, and Pritchett 2008).”