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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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    Citations

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    Cited by:

    1. Michael Clemens, 2010. "A Labor Mobility Agenda for Development," Working Papers 201, Center for Global Development.
    2. Calogero Carletto & Jennica Larrison & Çaglar Özden, 2014. "Informing migration policies: a data primer," Chapters,in: International Handbook on Migration and Economic Development, chapter 2, pages 9-41 Edward Elgar Publishing.
    3. 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.
    4. Fasani, Francesco & Frattini, Tommaso & Minale, Luigi, 2018. "(The Struggle for) Refugee Integration into the Labour Market: Evidence from Europe," IZA Discussion Papers 11333, Institute for the Study of Labor (IZA).
    5. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2014. "Tradable immigration quotas," Journal of Public Economics, Elsevier, vol. 115(C), pages 94-108.
    6. 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.
    7. Pritchett, Lant, 2018. "Alleviating Global Poverty: Labor Mobility, Direct Assistance, and Economic Growth," Working Paper Series rwp18-013, Harvard University, John F. Kennedy School of Government.
    8. 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 Other Operational Studies 19461, The World Bank.
    9. Blau, Francine D. & Kahn, Lawrence M., 2012. "Immigration and the Distribution of Incomes," IZA Discussion Papers 6921, Institute for the Study of Labor (IZA).
    10. 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.
    11. Francesco Fasani & Tommaso Frattini & Luigi Minale, 2017. "The (Struggle for) Labour Market Integration of Refugees: Evidence from European Countries," CReAM Discussion Paper Series 1716, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    12. 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.
    13. repec:eee:dyncon:v:85:y:2017:i:c:p:150-166 is not listed on IDEAS
    14. 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.
    15. Dilip Ratha & Sanket Mohapatra, 2011. "Preliminary Estimates of Diaspora Savings," World Bank Other Operational Studies 10902, The World Bank.

    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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