Anker Research Institute Working Paper Series | Number 1

Koen Voorend, Richard Anker and Martha Anker

ABSTRACT

This paper investigates the argument that the cost of a decent standard of living is lower for migrants than for nationals when the former have family members left behind in a low-wage, low-cost country. The wage differential between the host country and the country of origin is not only a motivating factor behind migration, but also partly a reflection of differences in the cost of living. This paper therefore analyses whether, following this rationale, a lower wage for migrant workers can be in a sense justified if one ignores ethical concerns around the need for “equal pay for equal work” argument. We analyze this argument for Nicaraguan migrants in rural Costa Rica based on two existing living wage studies which found that the cost of a basic but decent living standard is 2.5 times higher in the receiving country Costa Rica. We find that the empirical foundation for justifying a lower wage for migrants based on migrants having lower living costs because their family members left behind have lower living costs is not confirmed. This unexpected result is due to two main factors: (i) migrants have double costs for some expenditures (like housing) as well as considerable migration-related costs such as fees, increased phone costs, and costs for transfers, and (ii) the contribution to family income of a spouse is considerably lower for migrants because their spouse is earning in a low wage country.