Featured on EconoFact’s podcast, LaMP’s Research Director Lant Pritchett spoke with host Michael Klein about the economic sense of allowing foreign workers from labor-abundant countries to fill job vacancies in other countries, while also addressing the political and social concerns about expanding labor mobility. The following is an excerpt from the podcast transcript published by EconoFact on March 26, 2023 here.
Going back to the issue of technology and the scarcity of labor, you talk about in your Foreign Affairs article an example of self-driving trucks as an example of sort of a strange response to an absence of truck drivers. Can you talk a little bit about that?
Yeah, it’s just a great illustration where the scarcest resources on the planet, which are high-level scientific and technological knowledge and entrepreneurship, are economizing on something that’s globally abundant. The number of people in the world that would drive trucks in America if they were legally allowed to is enormous. But, since they’re not allowed to, the Elon Musks and Jeff Bezos and Larry and Sergey of Google are all working on developing technology of self-driving, but they’re driven to that by the lack of available labor. This isn’t a natural technological impulse. There’s nothing intrinsically happening in technology that would lead to this. This is the response to their inability to satisfy their demand for workers, but there isn’t a global scarcity of workers or truck drivers. It’s an artificially created scarcity by lack of, again, legal mechanisms for people to move from other countries and drive trucks in America.
So that speaks to the advantage in America of allowing people in. What about the advantage to those potential American truck drivers who are living abroad? They would benefit as well, correct?
Oh, and as you said in the introduction, I’m a development economist. I’ve worked most of my career on how can we make people better off, and how can we increase their productivity, and the wage differential between truck drivers in most of the world and that in the US is at least four to one. And the reason it’s four to one is that truck driving is just a more productive value producing activity in a rich, highly productive country than in a poor country. So just by allowing these workers to move, it creates gains to them that are just enormous relative to anything else on the development agenda. There’s no development project or program that can increase people’s wages by a factor of four, but allowing them to move from a low productivity to a high productivity place does it instantaneously.