Over the last six decades, Latin America and the Caribbean has experienced a wave of migration to urban areas that has boosted the percentage of people living in cities from around 50% of the population in 1960 to more than 80% today. Millions of those people have been forcibly displaced, fleeing crime, political conflict, and gang violence. Many others have been uprooted by the growing effects of climate change, whether those be natural disasters, like hurricanes and floods, or slow-onset events, like rising sea levels and drought. But most migrants are drawn to urban areas by economic opportunities. They arrive in megacities like Bogota, Buenos Aires, or São Paulo or smaller and medium-sized cities seeking better education, job, and business prospects.
Much has been written about the possible challenges posed by this mass influx. Observers have looked at everything from the negative effects on employment and wages of the most vulnerable local workers to the upward pressure on housing prices, the growth of informal settlements, and the overtaxing of public services in areas like transportation and health care. Much less attention has been given to the opportunities that migrants create for local economies in growing the population and labor force and potentially generating greater productivity, growth, and prosperity for all.
A New Report
Our recently released report “Rethinking Urban Migration” focuses on this latter perspective. It invites policymakers, academics, and other interested readers to expand their view of migration and see it as a source of economic dynamism while also considering policies that can mitigate the short-term negative impacts on vulnerable people and on housing and services.
The density of cities has much to do with the positive benefits of migration. It tends to stimulate specialization and competition, fostering innovation and entrepreneurship. As a result, cities generally have a higher GDP per capita than less populated areas. This attracts firms as well as younger students, workers, and managers with higher-than-average experience and skills that rejuvenate and complement the local labor force and further contribute to savings, investment, and business success.
Cities benefit from agglomeration economies, the gains that arise when firms and people locate near one another; from an intense concentration of highly skilled workers that spread their skills and knowledge to the rest of society; and from better access to large consumer and supplier markets for goods and services. All these things make them more productive and lead them to attract productive people, who in turn make the cities still more productive. Not surprisingly, urban firms can afford to pay their workers more than rural ones.
The Challenges of Urban Migration
If migrants have compelling reasons to be attracted to cities, however, large inflows of migrants can also cause some disruptions, at least in the short term, and make it hard for the cities to take advantage of their ambition and talents. Migrants, for example, can increase competition for jobs, negatively affecting the wages and employment of some local workers and exacerbating local wage inequality –especially for those at the bottom of the wage distribution. They may also lack local networks that allow them to find work appropriate to their skills or any work at all. And they may find themselves living far from agglomerated areas where their talents would contribute to the local economy. Discrimination can make these effects particularly severe for some migrants.
By driving up housing prices and rents, the influx of migrants can stimulate new construction, new jobs, greater profits for property owners, and the rejuvenation of neighborhoods. But it can also make it hard for migrants and local residents alike to afford places to live. This increase in the cost of housing may produce overcrowding or lead to the growth of informal neighborhoods, characterized by substandard living conditions and a lack property rights and adherence to regulations.
Policies to Maximize the Potential of Urban Migration
Such dilemmas are difficult to untangle. For that reason, a large part of our report addresses the policies that cities can adopt to both take advantage of the positive contributions of migration, while preventing its negative repercussions. What, for example, can be done in the realm of transportation, land-use planning, and building regulations to ensure that both residents and migrants can get to better paying jobs in the city and fully participate in the local economy? How can public employment services and policies be reformed so they help internal migrants lacking local networks find suitable jobs or help international migrants legalize their labor status? What policies would specifically benefit migrant — and resident — women? Our report delves into these questions and many more. It highlights measures that can take advantage of the generally younger age profile of migrants, find jobs suitable to their frequently higher skill levels and help them work in areas of the city where they most contribute to agglomeration economies. It also stresses policies that can mitigate the potential negative impact of migration on vulnerable groups. Migration, when supported by sound policies, can bring the ambitions and creativity of a young, skilled and diverse labor force to cities to make them more innovative, competitive, and productive. It is our hope that this report will help policymakers take advantage of that potential for a more prosperous and inclusive urban future in Latin America and the Caribbean.