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  • The Economist

How much you earn depends largely on where you live

Why egalitarians should support increasing immigration

THERE are several reasons why some people make more money than others. They could be brighter, or harder-working, or have rare talents. They could do jobs that pay better because they are unpleasant or dangerous. All these factors are important, but the strongest predictor of how much you earn is where you were born.

The chart above shows how the global income distribution has evolved over time. It suggests two things. First, that people in developing economies, especially in China, have become much richer in the past four decades. Second, that even middle-class people in the rich world are fabulously rich by global standards. According to data from the Brookings Institution, a think-tank, people who are at the 50th percentile of the earnings distribution in America sit at the 93rd percentile globally.

Part of the reason why people in the rich world earn more is that they are better-educated, which tends to make them more productive. But productivity also depends on where you work. A study by Michael Clemens and Hannah Postel of the Centre for Global Development, a think-tank, examined the wages of Haitians after their country was struck by a devastating earthquake in 2010. They found that the incomes of Haitian farmworkers who secured visas to work in America shortly afterwards rose by 1,400% compared with those who stayed in Haiti.

Simply moving to a country with the rule of law, good infrastructure, sophisticated companies and so forth—ie, a rich country—made the Haitians dramatically more productive.

John Rawls, a liberal philosopher, devised a clever thought experiment. He asked people what kinds of national policies they would support if they had to vote before they were born, and were ignorant of what their talents and personal attributes would be. Behind this “veil of ignorance”, Rawls argued, no one would support policies that favoured say, people of one sex or race over another.

There is no reason why Rawls’s “veil of ignorance” argument should not be applied at a global level, too. If you did not know whether you would be born in a rich country or a poor one, what kind of migration policies would you favour?

Politicians in rich countries who value their jobs will never ask this question. But it requires an answer, nonetheless.

Courtesy : The Economist

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