econ research paper

Public Property and the Effects of Migration upon Other Residents of the Migrants’ Countries of Origin and Destination

The point of this paper is to see which country will gain and which country will lose due to migration. The way they measure this is by his marginal product (the change in output resulting from employing one more unit of a particular input) in both countries. Migration also affects factor prices and the migrant’s earnings differ from the value of his marginal product. There are a few factors that we have to take in account: the large portion of a country’s property is publically owned and that the migrant exchanged his right to send his children to school in his country for the right of that child to go to school in his country of destination, they also exchange rights to the ownership of public buildings of all kinds, like roads, parks, royalties on minerals, etc. Migration confers a benefit upon the residents of his country of origin and a cost upon the residents of his country of destination by the effect of sharing of public property. There is the brain drain in contrast to the case of foreign investment where the gain from the international factor movement is divided by the two countries and is a widely held and strongly held view that the developed country gains now at the cost of those left behind in the less developed country. Although, it could easily be reversed if the migrants were much richer or more skilled than the average resident in the country from where they came from.

The Standard Case and Some Expectations

For the “standard case”, a migrant has no effect either upon the welfare of the people who remain behind in the country from which he comes or upon the welfare of the original residents of the country to which he goes because he would earn the value of his marginal product in each case. In the economy there is the output (Q) and there are two factors of production that are labor (L) and capital (K). There is also the real wage rate (w) and the real rent of capital (r). The “real” only means that the w and r are measured in units of Q. Therefore there is the following formula:

Q = wL + rK

A migrant may be thought of as brining with him a bundle of labor and capital, which make for the change in both factors of production. There is also a change in all of the factors that will manipulate the formula to look like this:

Q + Q	= (w + w)(L + L) + (r + r)(K + K)
	= (wL +rK) + Lw +Kr) + [(w + w)L + (r + r)K]

There are some more formulas that should be explained here! They call this the standard case where L ad r are small in comparison with L and r. They have to examine the “exceptions” that might cause migration to affect the welfare of the original residents favorable and unfavorable as the case may be. There are three main cases of exceptions called the trade argument, the distributional argument, and the factor market argument.

The terms of Trade Argument

· The general case

· Migrant-specific factors of production

· Foreign ownership of capital

· The alleviation of shortage

The Distribution Argument

The Factor Market Argument

The general form of this argument is that migrations is beneficial or harmful to original residents because the remuneration of the migrant’s facts of production is less or more than the sum of their marginal products.

· Progressive taxation

Progressive taxation is when the net wage is greater than the marginal product of labor for the poor but less than the marginal product of labor for the rich. This means that the progressive taxation tends to render migration beneficial or harmful to the original residents according to whether the migrants are relatively rich or poor.

· Economies of scale

Increasing returns to scale is when the output is less than what is required for each factor of production to receive the value of its marginal product. Increasing returns to scale is Q = F(K,L) implies that the wage of labor is less than the marginal product of labor, or the rent of capital is less than the marginal product of capital, or both. There is a benefit if the increasing returns to scale cause the wage to fall short of the marginal product of labor and the migration of the extra worker causes the benefit. For decreasing returns of scale cause the wage to exceed the marginal product of labor, the migration of an extra worker results in a net loss to the ret of the economy. Another example is that migrants contribute to the cost of defense, which reduces the cost for everyone else in the country without reducing the amount of defense provided. On the other hand with the goods that have a fixed supply like land, minerals, water, they may be sources of decreasing returns to scale and a potential cost of migration to the original residents.

· Externalities

Migration is advantageous or disadvantageous to the original residents of the country if his activities confer externalities or disexternalities on the people around him. It is important that the migration is of highly educated people. The net contribution of educated people is in excess of their wage. Therefore, the inmigation of educated people is beneficial and outmigration of educated people is harmful to the rest of the population. Migrants would also convey externalities if their propensity to save were greater that the propensity to save of the original residents and if the tax laws were such that the social return to saving is significantly in excess of the private rate of return. Migrants could be said to convey a kind of externality upon the rest of the population if their crime rates were low.

· The cost of education

The cost of education would be irrelevant to the assignment of gains losses from migration if each man paid the full cost of his education, but it becomes important when education is subsidized or provided free of charge by the state. The state does this so that one way or another the net income of educated labor will be less than its marginal product. Its validity rests entirely on the assumption that educated labor is paid less than the value of its marginal product. The government wishes to maintain a given proportion of educated people. Then the outmigration of educated people forces the government to provide more education that would otherwise be necessary. The cost of education plays an important role in the analysis of the brain drain.

Public Property

Some Back-of-the-Envelope Calculations

General Comments

Conclusion