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The Impact of Low-Skilled Migrants on High-Skilled Women’s Work

David McKenzie's picture

Much of the debate about the effects of immigration on native workers focuses on possible negative consequences for wages or employment. However, a series of recent papers highlights a big positive effect – having immigrants as cleaners, nannies, and home-care assistants allows high-skilled women to work more.

Evidence for the U.S. comes from Patricia Cortés and José Tessada in the latest issue of the American Economic Journal: Applied Economics. They estimate the impact of variation in changes in the concentration of low-skilled immigrants in different U.S. cities in 1980, 1990 and 2000 on female labor supply, hours worked, houses spent doing household chores, and expenditure on household care. Identification comes from instrumenting new immigration waves with the 1970 immigrant shares in different cities, based on the idea that migrant networks are self-reinforcing. They find the low-skilled immigration wave of the 1980s and 1990s increased by 20 minutes a week the time that women at the top quartile of the wage distribution spent working in the market, with this effect only at the intensive margin (how much skilled women work, not whether they work) and mostly coming through increases in the probability of high-skilled women working more than 50 and 60 hours per week - and this same group of high-skilled women also reduce time devoted to housework and increase their expenditure on household services.

Despite having written papers that use historic (80 year ago) migration networks as instruments for current migration in Mexico, and the prevalence of this approach in both the immigration and emigration literatures, I am not a big fan of the use of relatively recent migration networks as an instrument – indeed I receive many papers each to referee that use say migrant networks from 5 or 10 years ago as an instrument for current migration, and am fairly critical of such work. The problem is that, unlike in the Mexican case, there is usually not a story of why migrant networks should be exogenously different across locations. Cortes and Tessada recognize this issue, and do include a good number of additional controls including the use of city fixed effects, region*decade time trends, and interactions of 1970 labor force participation rates of college educated women and other key 1970 variables with time trends to at least ease some of these concerns. However, a further issue which the paper doesn’t seem to address is whether high-skilled women migrate to work where there are low-skilled immigrants – instead only discussing the possibility of migration responses by low-skilled natives.

Guglielmo Barone and Sauro Mocetti in a recent working paper look at the same issue for Italian women, who on average have low labor force participation rates by European standards. Their instrument is similar in spirit, but with a slight twist – they exploit the tendency of newly arriving female immigrants from countries whose workers tend to work in domestic services to settle in places where males of the same country already live. Like the U.S. case, they find no effect on the extensive margin, but increases in hours worked for high-skilled women. The magnitudes are larger than in the U.S. case – the almost 6 percentage point increase in immigration into Italy over the 1990s is estimated to have increased hours worked by skilled natives by about 3 hours per week. Interesting heterogeneity is that the results are stronger for women with children aged under 3, and for women in municipalities with weaker social and family policies – i.e. immigration is serving as a substitute to the childcare services sometimes offered by the state.

A new working paper by Tiago Freire argues that the same phenomenon occurs with rural-urban migration in Brazil. Using rainfall shocks in rural areas to explain why people leave rural areas, and distances to different cities to predict where the move to when they receive a shock, he finds migration of low skilled women to cities lowers the wages of maids in those cities, increasing the labor supply of high-skilled women.

Facilitating more migration of low-skilled women, both internally and internationally, therefore offers the possibility for a wide range of benefits. Indeed Michael Kremer and Stanley Watts calculate that the gains from a program like Singapore or Hong Kong’s could increase native welfare by 1.2 percent (which far exceeds the magnitudes calculated in traditional estimates of the benefits of migration which ignore impacts on high-skilled women’s work) – while at the same time potentially lowering wage inequality (as an increased supply of high skilled workers lowers their wages) and reducing gender disparities among high-skilled natives. The migrant workers gain from the additional income, although more research is still needed on what the long-term costs of separation from their families are.

Comments

Submitted by Claire Melamed on
Very interesting stuff, thanks! I've linked to this piece from my blog: http://www.globaldashboard.org/2011/07/11/yes-but-who-does-the-laundry-the-world-bank-on-women-and-domestic-work/ Dr. Claire Melamed Head of Growth, Inequality and Poverty Programme Overseas Development Institute London

Submitted by Jennifer Keller on
These are interesting results, David. The effects on female labor participation reminded me of a paper we commissioned in 2008 to explore the social and economic impact of MENA's migration in several European countries. One host country that was explored was Spain, and J. Ignacio Conde-Ruiz and Clara Gonzalez wrote a paper, "An Immigration boom under reactive immigration policy: the case of Spain." Among its findings was a similar result to that which you mention, that the intensive immigration inflow to the Spanish labor market was associated with a spectacular increase in the female activity rate (in addition to an actual DECLINE in unemployment among Spaniards and a stable level of fixed-term contract rate). In fact, by increasing the availability of domestic helpers and reducing the cost of this service, the OEP estimated that for every point increase in the immigration rate, the female activity rate rose by 0.6 points, and over one-third of the 12 percentage point rise in the female activity rate was attributable to immigration.

Submitted by Isabela Manelici on
Dear David, Your blog is highly interesting and I have enjoyed its insights. Thank you! Nevertheless, as much as I am a feminist at heart and salute the empowerment of women in developed countries, I would like to remind 2 points that I personally find relevant (please feel free to disregard them): - If we want to do a larger assessment of the impact of migration on women, the 1st focus should maybe be on the women migrants. In my view, they are the most vulnerable category in this equation. As Susan Martin argues in WOMEN, MIGRATION AND DEVELOPMENT (http://isim.georgetown.edu/publications/20070601_Martin.pdf) -"Many women who migrate find themselves at risk of gender-based violence and exploitation. Whether labor migrants, family migrants, human trafficking victims, or refugees, they face the double problem of being female and foreign. In addition, it is important to keep in mind that gender does not operate in isolation from race, ethnicity, and religion. Since many migrant women differ from the host population in these respects, they may face additional discrimination." I believe this is particularly true for low-skilled women migrants. - My second point is related to what happens to high-skilled women migrants. In a draft paper on MAKING A CAREER? THE INTEGRATION OF HIGHLY SKILLED FEMALE MIGRANTS INTO THE GERMAN JOB MARKET (http://umdcipe.org/conferences/Maastricht/conf_papers/Papers/Making%20a%20Career.pdf) the authors remind that "Nationality has a severe impact not only on how to access the labor market, but also on determining the type of occupation female migrants can engage in." So if we limit our focus to women migrating from developing countries (which we are of course not obliged to do) the gender considerations look less positive. I presume that my nationality is not random in this comment, being a Romanian woman aware that high-skilled Romanian women migrants frequently find themselves forced to work in positions below their skills and therefore allow, let’s say, Western/Southern-European high-skilled women to pursue their careers. I hope I will not be misunderstood, I find the empowerment of these Western/Southern-European women very fortunate. But what is the cost for the women migrants and what does this teach us about the EU inclusion mechanisms or about the recognition of diplomas from developing countries? Once again David, interesting blog and keep up the excellent work!

Thanks Jennifer for the Spanish evidence, and Claire for the related post, which touches on similar issues to Isabela. The truth is that we still don't have great evidence on many of the impacts that female migration, especially as a domestic worker, has on the migrant themselves and on their families. Moreover, the impacts are likely to vary significantly according to destination - to characterize it crudely, on one hand you have destinations like the Middle East and Malaysia, where wages are low and there are a number of concerns about rights, but where women who would not otherwise be able to work abroad get a chance to do so; whereas on the other hand you have the labor markets of Western Europe/the U.S. etc where conditions are generally better (with of course exceptions), but where the number of openings is often much more limited. The massive excess supply of women willing to go to both destinations suggests that they believe life will be better overall in either place. The evidence on whether high-skilled migrants end up working for long periods of time in jobs well below their skills levels is mixed. There are a number of studies (such as those which send CVs with different names on them) which show evidence of discrimination, and certainly bureaucratic problems in transferring qualifications. But on the other hand, work such as the paper by Caglar Ozden and others in the JDE on brain waste and my forthcoming JEP paper on brain drain show that most skilled migrants are working in skilled jobs, and those that aren't are often from countries with lower quality education systems. But again this is an area where we'd like to know more - I know the Bologna process in Europe aims to overcome some of the issues Isabela raises, but don't have a good sense of how well it is working to date.

Submitted by Isabela Manelici on
Dear David, I really appreciate your taking the time to answer to our comments. This is a very rich exchange. My points were of course the response to somehow provocative results of the studies you have presented. Gender and migration is, by my neophyte understanding, a complex research field and I congratulate your efforts to put some order in it. There are 2 last points that I believe might further nuance the conversation – points I imagine you are already familiar with: • Employment of women migrants should be considered in its dynamics: what opportunities of incremental professional growing will arise for these women migrants, first working as housekeeping aids? I would tend to assume their opportunities are less fortunate than, let’s say, for a woman migrant starting in a low-skilled position in a factory. But again, maybe their professional path could be hoped as non-incremental? (e.g. women working as housekeeping aids - while pursuing a degree that boosts their professional opportunities in the new country) • The reasons why women migrants accept under-skilled positions are highly variable. I would however expand the understanding of a “better life” beyond improved income (I refer to your Singapore example). Their social status, their individual perspectives (as opposed to the perspectives of their family overall) in the new country might be less promising than hoped and the overall individual bettering of the life could be a mirage. But again, I imagine these are topics broader that the intent of the blog post. Thank you for the opportunity to bring a modest input.

Another interesting post David. Some points on the impact of domestic worker migration on the family: I did a small survey on savings and remittances with Filipino migrants in London, comparing domestic workers (FDWS) them to Filipino migrants of other occupations. Results showed that the former, whilst paid less, remitted more home as a proportion of salary (to be expected) and saved less than other migrants. They also used savings accounts in the Philippines whereas non FDWs had UK bank accounts. A higher proportion of migrant domestic worker's remittances (1/2 or more) were spent on daily consumption (food, school fees, utilities) by families back home than for other occupational groups, and frequency of remittance sending was also higher for FDWs. They also invested in land, housing, business, perhaps indicating intent to return. Tacoli (1999) has a paper in IMR looking at similar variables in Rome amongst Filipino migrants (majority FDWs) that may be of interest. Semoyov and Gorodzeisky's (2004) IMR paper (http://www.jstor.org/pss/27645355) talks about "downward" occupational mobility observed in a sample of Filipino migrants (35% and 41% for professional men and women respectively) where 90% of men and women were in manual or personal service occupations. Consistent with the literature on remittances they find that remittance flows ultimately improve household well being - in this sense it doesn't really matter what the migrant does. As you know there hasn't been much research in this area because FDWs are hard to access in countries where they don't enjoy labour rights as other occupational groups. I agree with your point about migrant domestic workers facilitating the labour market participation of women in destination countries which is of obvious benefit to that country's economy. You could say migrant FDWs win too because they are paid more than they would be back home. But despite the financial gains, you do not raise the question of how sustainable or desirable this is for individual families and migrants themselves, many of whom would like to remain in home countries - FDWs particularly express a greater sense of "no choice" when it comes to migration because of chronic unemployment at home. There is also more nuance behind FDW migration at the macro level. Host government facilitated FDW migration is a private solution to a public problem - a lack of care resources. FDWs are increasingly being hired to take care of elderly parents in Singapore and other Asian countries, where their wages are kept deliberately low. This permits governments not to invest in decent care infrastructure (staff and facilities). It is cheaper to hire an FDW who will do housework, child and elder care all in one rather than pay for a nursery or care home (http://www.spp.nus.edu.sg/docs/Nicola-Pocock-article-GiA.pdf). Out migration and de-skilling of high skilled migrants also does not incentivise source country governments (e.g.Philippines) to tackle massive under and unemployment - raising the question of what is better for both migrant and country. Being presumptuous I'd say creating buoyant domestic labour markets that allow potential migrants to stay at home, if that is what they desire.