Pinelopi Koujianou Goldberg

For around a week in late June, Western media were obsessed with the fate of the Titan, a small submersible carrying a few billionaires and others to the sunken Titanic and later found to have imploded within hours of beginning its descent. Meanwhile, a boat carrying some 750 economic refugees capsized off the Greek coast, killing hundreds who had boarded in Libya after making perilous journeys from places like Afghanistan, Pakistan, and Syria. Pakistan declared a national day of mourning for its citizens lost at sea. But the West paid hardly any notice.

Of course, it is unfair to fault the press for responding to the demands of its audience. The relatively scant coverage of the migrants’ tragedy is symptomatic of a larger tendency to ignore the plight of those who happen to have been born in less privileged parts of the world. The mood has changed since the 2015 refugee crisis, when chilling photos of a migrant boy who had washed up on the Turkish coast elicited outrage and a vigorous response from policymakers in rich countries. In the intervening years, the Western public has become inured to such images, more often looking inward, or focusing on other priorities.

True, a cynic might say that the intense coverage of the 2015 refugee crisis was motivated less by idealism than by pragmatic concerns about Europe being overwhelmed by millions of people fleeing from violence. But even if that was the case, the same concerns dictate that advanced economies pay more attention to the developing world’s problems today.

Most governments around the world have recognised that they can no longer ignore climate change and other environmental damage. But ignoring the huge gap in living standards between the Global North and South has similarly become unsustainable. Owing to advances in communications technology and access to social media, the poor today are keenly aware of the vast differences between their lives and those of people living in rich countries. As long as these differences remain, they will keep pushing north in search of a better future. No border, no wall, and no sea will keep them where they are. The ongoing immigration crisis at the United States’ southern border and the continuing drama on the seas around Greece and Italy have made that clear.

But the quest for a better life is just the supply side of the equation. On the demand side, labour-market shortages have created a strong incentive to bring people into advanced economies to do the work that natives no longer do. In the absence of well-considered immigration policies that can satisfy this need, reckless smugglers have filled the void.

The labour-market shortages in advanced economies are not some temporary or short-run phenomenon. In the US, a recent Brookings Institution study documents a shortfall of 2.4 million workers as of December 2022, relative to the 12-month average ending in February 2020. Most of this decline would have happened without the pandemic, owing to changes in the age and education of the population. But there was also a decline in the average weekly hours worked, producing an additional labor-supply shortfall equivalent to another 2.4 million people.

This reduction in work hours cannot be attributed solely to COVID-19 or the fear of long COVID. While its causes are not yet fully understood, a re-evaluation of work-life balance seems a plausible hypothesis. In any case, the bottom line is that labor shortages experienced in the aftermath of the pandemic are likely to persist, both in the US and in Europe, where low fertility and aging populations present similar demographic challenges.

While advances in automation, robotics, and artificial intelligence may mitigate some labour-supply challenges, not every job can be replaced by a robot or a computer-generated service. Many of the jobs that remain in demand are in sectors like construction, housekeeping, health care and hospitality, where the work is usually not pleasant or glamorous. If Americans and Europeans are unwilling to take these positions, it makes sense to offer them to motivated, hardworking immigrants. This is not about providing humanitarian assistance; it is just sound economic policy, especially at a time when repeated interest-rate hikes by central banks have not yet resolved one of the primary contributors to inflation: tight labour markets.

A well-designed immigration policy that allows for the controlled entry of willing workers, and that helps integrate them into host countries, would go a long way toward easing labour-market tightness and preventing humanitarian tragedies caused by smugglers’ shameless exploitation of migrants and refugees. But policymakers will need to look beyond the next election cycle and rise above partisan political interests.

At the same time, it is neither possible nor desirable to move the entire populations of low-income countries to America and Europe, so it is imperative to reject short-sighted economic nationalism. Advanced economies must do more to address the huge imbalances that still exist across the world economy. Reducing global inequality is essential to a sustainable future.

Pinelopi Koujianou Goldberg, a former World Bank Group chief economist and editor-in-chief of the American Economic Review, is professor of Economics at Yale University. Copyright: Project Syndicate, 2023.

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