Chapter 2 - Demographic Change and International Labour Mobility in Northeast Asia – Issues, Policies and Implications for Cooperation

Summary

Introduction

The initial economic model for migration is known to be the one developed by Lewis (1954) which was modified and enriched later by Fei and Ranis (1961) and then by Harris and Todaro (1970). In Lewis (1954) model of rural-urban migration, the economy is composed of two sectors: one is a traditional, rural subsistence sector held in extremely low marginal labour product, and the other is a modern urban industrial sector with high marginal labour product. People move from the subsistence sector to the industrial sector. Migration takes place because of the expansion of the capitalistic industrial sector and the earnings gaps between the two sectors. The process continues until the re-allocation of surplus labour of the subsistence sector to industry is complete.

Fei and Ranis (1961) admit the possibility of a change of productivity and population growth in the agricultural sector which may lead to a postponement of the Lewis turning point. In Harris and Todaro (1970) model, migration proceeds, even if there is no surplus in the agricultural sector, in response to urban-rural differences in expected earnings, with the urban employment rate acting as an equilibrating force.

These frameworks can be translated into the world economy with a group of high income countries on the one part and the other group of low income countries on the other. Migration takes place when the earnings gaps continue to exist between the high income group and the low income group. The high level of marginal labour product in the former and the low level of marginal labour product in the latter generate migration flows from the former. Therefore, as far as the earnings gaps persist between the two groups of countries, despite the existence of significant levels of unemployment in the high income countries, the forces of migratory flows continue to exist. However, discerning the determinants of international migration is more complex than calculating earnings gaps or forecasting demographics.