Same Job, Different Wage for Migrants?
Referring to Working Paper written by Koen Voorend, Richard Anker and Martha Anker.
“While it is true that there are significant differences in the costs associated with a decent standard of living in receiving and sending countries, the cost structure of decent living for migrants also changes in all the components that are considered in the Anker Methodology”.
Producers in immigrant receiving countries, such as Costa Rica, often make the argument that a separate (and lower) living wage for migrants is justified. The argument is that migrant workers migrate alone from a low-cost low-wage country to a higher-cost higher-wage country, with the wage differential being a motivating factor behind migration, and partly a reflection of differences in the cost of living. Therefore, in this rationale, a wage for migrant workers can justifiably be lower than for a national worker because the costs of a decent standard of living are lower for the former (where other family members live) than for the latter.
There are many ethical concerns that make this argument problematic, the most important being that separate living wages for nationals and migrants would violate the bedrock principle of equal pay for work of equal value and probably lead to discrimination based on nationality. However, as an academic exercise, we critically looked at this argument by analyzing this for Nicaraguan migrants in Costa Rica, using data on living costs in rural Costa Rica and rural Nicaragua from ARI benchmark studies.
The 2021 working paper ‘Same Job, Different Wage for Migrants? (link below to read the full paper) focuses on estimating the total living costs for migrant workers in Costa Rica and their families, and the specific costs related to the migration process and being a regular migrant in the country. The study considers two migration scenarios: first, a migrant worker with spouse and two children in Nicaragua; and second, a migrant worker and two children left behind in Nicaragua under the care of grandparents.
While it is true that there are significant differences in the costs associated with a decent standard of living in receiving and sending countries, the cost structure of decent living for migrants also changes in all the components that are considered in the Anker Methodology.
Figure 1. Family living expenses for two migrant scenarios and Costa Rican resident family.
Figure 1 shows the family living expenses for decency for the two migrant scenarios compared to that of a Costa Rican resident family. The cost of a basic, but decent standard of living for the national family are considerably higher, much of which is explained by the higher Non-Food Non-Housing costs, because they are all in the more expensive country. In contrast, in the migrant scenarios, a considerable share of NFNH costs is in the less expensive country, Nicaragua.
However, there are specific costs related to the migration process and being a regular migrant in a host country that the original living wage studies did not consider, such as the legal costs of documentation, and costs related to the dynamics of migrant families - for example, the fees for sending remittances and making periodic family visits. These migration-related costs must be considered.
Figure 2. Total living costs, living wage needed for decency, and spouse’s earnings in two migration scenarios and the Costa Rica baseline.
Figure 2 shows the total living costs (light grey) and the breakdown of wages into the migrant’s living wage (blue) and the spouse’s contribution to income (green). Although the costs of living of nationals and migrants differ substantially, the living wages of migrants and nationals are only marginally different. This is because the spouse’s earnings in a Costa Rican resident family constitutes a much larger contribution to total household income compared to that of the migrant family’s spouse.
In all, the results are surprising as they show that the living wage for a migrant from rural Nicaragua living in rural Costa Rica with a family left behind in Nicaragua is similar (less than 5% lower) to the living wage for a rural Costa Rica resident with a similar size family. This result, therefore, provides empirical evidence to counter the argument for a lower living wage for migrant workers, and reinforces world-wide ethical norm of equal pay for work of equal value.
This surprising result is driven by several factors.
First, there are costs related to being a migrant, particularly to being a regular migrant. These costs include the fees for the regularization process and renewal of migration documents, remittance fees for sending home money each month, and extra communication costs. These migration-related costs represent about 8% of total living costs.
Second, housing costs for migrants and residents are quite similar. This is partly because migrants need two houses to accommodate the migrant family living on both sides of the border and partly because both of these houses needed to be at an acceptable decency level for a living wage. And while undoubtedly many, if not most, Nicaragua migrants in Costa Rica actuality live in poor housing, this is a choice in order to save money. Note that while estimated costs for basic healthy housing are similar for migrants and resident nationals in absolute terms, housing costs represent a substantially larger share of total expenditure for migrant families compared to national resident families (around 29% versus around 18%).
Third, while food costs are substantially lower in Nicaragua, the adult migrant in Costa Rica also requires a decent diet and being without a spouse to shop and prepare meals for free as part of unpaid care work, migrants spend more on meals away from home and this increases food costs. As a result, food costs as a share of total expenditure are fairly similar for migrants and for nationals, at around 30-33%.
Fourth, there is a big difference between migrants and nationals in the contribution to family income of the spouse. The migrant’s spouse living in Nicaragua has rather low earnings, because we assume that s/ he earns at a typical Nicaraguan level such as the minimum wage which is very low compared to wages in Costa Rica. Indeed, we found that the contribution to family earnings of the spouse living in Nicaragua is not much more than the migration-related expenses incurred by the migrant worker.
“This result, therefore, provides empirical evidence to counter the argument for a lower living wage for migrant workers, and reinforces world-wide ethical norm of equal pay for work of equal value.”
Click to read the full working paper below
For more information about our research on migration, contact ARI’s Senior Researcher: Koen Voorend, kvoorend@ankerinstitute.org
For general inquiries about the Anker Research Institute’s work, contact: inquiries@ankerinstitute.org
Views expressed are the authors. The opinions expressed here belong solely to the author and may or may not reflect the views of Anker Research Institute.