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Income per natural: Measuring development as if people mattered more than places

Author

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  • Michael Clemens
  • Lant Pritchett

Abstract

It is easy to learn the average income of a resident of El Salvador or Albania. But there is no systematic source of information on the average income of a Salvadoran or Albanian. We create a first estimate a new statistic: income per natural—the mean annual income of persons born in a given country, regardless of where that person now resides. If income per capita has any interpretation as a welfare measure, exclusive focus on the nationally resident population can lead to substantial errors of the income of the natural population for countries where emigration is an important path to greater welfare. The estimates differ substantially from traditional measures of GDP or GNI per resident, and not just for a handful of tiny countries. Almost 43 million people live in a group of countries whose income per natural collectively is 50% higher than GDP per resident. For 1.1 billion people the difference exceeds 10%. We also show that poverty estimates are very different for national residents and naturals; for example, 26 percent of Haitian naturals who are not poor by the two-dollar-a-day standard live in the United States. These estimates are simply descriptive statistics and do not depend on any assumptions about how much of observed income differences across naturals is selection and how much is a pure location effect. Our conservative, if rough, estimate is that three quarters of this difference represents the effect of international migration on income per natural. This means that departing one’s country of birth is today one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.

Suggested Citation

  • Michael Clemens & Lant Pritchett, 2008. "Income per natural: Measuring development as if people mattered more than places," Working Papers 143, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:143
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    File URL: http://www.cgdev.org/content/publications/detail/15552
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    Cited by:

    1. Michael Clemens, 2010. "A Labor Mobility Agenda for Development," Working Papers 201, Center for Global Development.
    2. Michael Gove, 2018. "Migration as Development: Household Survey Evidence on Migrants’ Wage Gains," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 1033-1060, June.
    3. Calogero Carletto & Jennica Larrison & Çaglar Özden, 2014. "Informing migration policies: a data primer," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 2, pages 9-41, Edward Elgar Publishing.
    4. Artuc, Erhan & Docquier, Frédéric & Özden, Çaglar & Parsons, Christopher, 2015. "A Global Assessment of Human Capital Mobility: The Role of Non-OECD Destinations," World Development, Elsevier, vol. 65(C), pages 6-26.
    5. Francesco Fasani & Tommaso Frattini & Luigi Minale, 2022. "(The Struggle for) Refugee integration into the labour market: evidence from Europe [Cashier or consultant? Entry labor market conditions, field of study, and career success]," Journal of Economic Geography, Oxford University Press, vol. 22(2), pages 351-393.
    6. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2014. "Tradable immigration quotas," Journal of Public Economics, Elsevier, vol. 115(C), pages 94-108.
    7. John Gibson & David McKenzie, 2012. "The Economic Consequences of ‘Brain Drain’ of the Best and Brightest: Microeconomic Evidence from Five Countries," Economic Journal, Royal Economic Society, vol. 122(560), pages 339-375, May.
    8. Lant Pritchett, 2018. "Alleviating Global Poverty: Labor Mobility, Direct Assistance, and Economic Growth," Working Papers 479, Center for Global Development.
    9. David McKenzie, 2014. "The tyranny of experts: economists, dictators, and the forgotten rights of the poor, by William Easterly," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 6(2), pages 211-214, June.
    10. John Gibson & Steven Stillman & David McKenzie & Halahingano Rohorua, 2013. "Natural Experiment Evidence On The Effect Of Migration On Blood Pressure And Hypertension," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 655-672, June.
    11. Adriana Jaramillo & Alan Ruby & Fabrice Henard & Hafedh Zaafrane, 2011. "Internationalization of Higher Education in MENA : Policy Issues Associated with Skills Formation and Mobility," World Bank Publications - Reports 19461, The World Bank Group.
    12. Blau, Francine D. & Kahn, Lawrence M., 2012. "Immigration and the Distribution of Incomes," IZA Discussion Papers 6921, Institute of Labor Economics (IZA).
    13. Iranzo, Susana & Peri, Giovanni, 2009. "Migration and trade: Theory with an application to the Eastern-Western European integration," Journal of International Economics, Elsevier, vol. 79(1), pages 1-19, September.
    14. Francesco Fasani & Tommaso Frattini & Luigi Minale, 2017. "The (Struggle for) Labour Market Integration of Refugees: Evidence from European Countries," RF Berlin - CReAM Discussion Paper Series 1716, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    15. Ted Davis & David M. Hart, 2010. "International Cooperation to Manage High‐Skill Migration: The Case of India–U.S. Relations," Review of Policy Research, Policy Studies Organization, vol. 27(4), pages 509-526, July.
    16. Venla Niva & Alexander Horton & Vili Virkki & Matias Heino & Maria Kosonen & Marko Kallio & Pekka Kinnunen & Guy J. Abel & Raya Muttarak & Maija Taka & Olli Varis & Matti Kummu, 2023. "World’s human migration patterns in 2000–2019 unveiled by high-resolution data," Nature Human Behaviour, Nature, vol. 7(11), pages 2023-2037, November.
    17. Vasilakis, Chrysovalantis, 2017. "Does talent migration increase inequality? A quantitative assessment in football labour market," Journal of Economic Dynamics and Control, Elsevier, vol. 85(C), pages 150-166.
    18. Nathan I. Hoffmann, 2024. "Strangers in the Homeland? The Academic Performance of U.S.-Born Children of Return Migrants in Mexico," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 43(3), pages 1-25, June.
    19. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    20. Dilip Ratha & Sanket Mohapatra, 2011. "Preliminary Estimates of Diaspora Savings," World Bank Publications - Reports 10902, The World Bank Group.

    More about this item

    Keywords

    economic development; migration;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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