Publication: The Place Premium : Wage Differences for Identical Workers across the US Border
Date
2008-07
ISSN
Published
2008-07
Author(s)
Clemens, Michael A.
Montenegro, Claudio E.
Pritchett, Lant
Abstract
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.
Link to Data Set
Citation
“Clemens, Michael A.; Montenegro, Claudio E.; Pritchett, Lant. 2008. The Place Premium : Wage Differences for Identical Workers across the US Border. Policy Research Working Paper No. 4671. © World Bank, Washington, DC. http://hdl.handle.net/10986/6828 License: CC BY 3.0 IGO.”
Report Series
Report Series
Other publications in this report series
-
PublicationHow to Deal with Exchange Rate Risk in Infrastructure and Other Long-Lived Projects(World Bank, Washington, DC, 2023-09-19)Most developing economies rely on foreign capital to finance their infrastructure needs. These projects are usually structured as long-term (25–35 years) franchises that pay in local currency. If investors evaluate their returns in terms of foreign currency, exchange rate volatility introduces risk that may reduce the level of investment below what would be socially optimal. This paper proposes a mechanism with very general features that hedges exchange rate fluctuation by adjusting the concession period. Such mechanism does not imply additional costs to the government and could be offered as a zero-cost option to lenders and investors exposed to currency fluctuations. This general mechanism is illustrated with three alternative specifications and data from a 25-year highway franchise is used to simulate how they would play out in eight different countries that exhibit diverse exchange rate trajectories.
-
PublicationRebel with a Cause: Effects of a Gender Norms Intervention for Adolescents in Somalia(World Bank, Washington, DC, 2023-09-15)Gender inequality and restrictive norms are often reinforced and internalized during adolescence, influencing pivotal life choices. This paper presents results from a randomly-assigned gender norms intervention for young adolescents in Somalia that led to greater support for gender equality in reported attitudes among both girls and boys. In a novel lab-in-the-field experiment designed to observe social group dynamics, treated adolescents were also found to be less likely to succumb to peer pressure to conform when stating their gender attitudes in public. Perceptions of gender norms appears to shift for boys, leading to a greater public expression of gender egalitarian ideals. Furthermore, the findings show improved adolescent mental health, increased caring behavior towards siblings of the opposite sex, and a higher likelihood of involvement in household chores by boys. A complementary gender norms intervention for parents had limited marginal impact on the attitudes and behaviors of adolescents. The results suggest that gender norms interventions can be effective in influencing the attitudes and public discourse around gender equality, even in early adolescence.
-
PublicationCorruption as a Push and Pull Factor of Migration Flows: Evidence from European Countries(World Bank, Washington, DC, 2023-09-14)Conclusive evidence on the relationship between corruption and migration has remained scant in the literature to date. Using data from 2008 to 2018 on bilateral migration flows across European Union and European Free Trade Association countries and four measures of corruption, this paper shows that corruption acts as both a push factor and a pull factor for migration patterns. Based on a gravity model, a one-unit increase in the corruption level in the origin country is associated with a 11 percent increase in out-migration. The same one-unit increase in the destination country is associated with a 10 percent decline in in-migration.
-
PublicationGlobal Trends in Child Monetary Poverty According to International Poverty Lines(World Bank, Washington, DC, 2023-09-19)This paper analyzes extreme child poverty ($2.15/day poverty line) trends, as well as child poverty based on the higher international poverty lines of $3.65 and $6.85. The paper provides a trajectory of extreme child poverty (children living in extremely poor households) from 2013 to 2019 (based on the most recent surveys included in the Global Monitoring Database), complemented by nowcasting for 2020 to 2022. Children continue to be disproportionately affected by extreme poverty. Children who are younger than 18 years comprise more than 50 percent of those living in extreme poverty, although their share of the population is 31 percent. The paper estimates that in 2019, 15.8 percent of children in the world (319 million) younger than 18 years lived on less than $2.15 (2017 purchasing power parity) per day, as opposed to 6.6 percent of adults ages 18 and older. More recent “nowcasted” estimates suggest that at least 333 million children were expected to be living in extremely poor households in 2022, implying that 14 million more children were extremely poor in 2022 than in 2019. Following an increase in extreme child poverty at the height of the pandemic in 2020, nowcasted estimates show that the rate of extreme child poverty fell again in 2021 and 2022, but only at the slow rate of progress seen prior to the COVID-19 crisis. If the COVID-19 pandemic had not occurred, an estimated 79.7 million fewer children would have been living in extreme poverty between 2013 and 2022; however, the estimates suggest that the number of children living in extreme poverty decreased by 49.2 million, due to pandemic disruptions.
-
PublicationFiscal Policy Effects on Poverty and Inequality in Cambodia(World Bank, Washington, DC, 2023-09-25)This study assesses the short-term impact of fiscal policy, and its individual elements, on poverty and inequality in Cambodia as of 2019. It applies the Commitment to Equity methodology to data from the Cambodia Socio-economic Survey of 2019/20 and fiscal administrative data from various government ministries, departments, and agencies for the assessment. The study presents among the first empirical evidence on the impact of taxes and social spending on households in Cambodia. The study finds that: (i) Cambodia’s 2019 fiscal system reduces inequality by 0.95 Gini index points, with the largest reduction in inequality created by in-kind transfers from spending on primary education; (ii) while Cambodia’s fiscal system reduces inequality, the degree of inequality reduction is small in international comparison; and (iii) low-income households pay more in indirect taxes than they receive in cash benefits in the short term to offset the burden. As a result, the number of poor and vulnerable individuals who, in the short term, experience net cash subtractions from their incomes is greater than the number of poor and vulnerable individuals who experience net additions. Fiscal policy can deliver more net benefits to poor and vulnerable households through expanding social assistance spending. Cambodia has embarked on this expansion during the coronavirus pandemic, bringing it closer in line with comparators.