Tl;dr
• The estimated global gains from reducing migration barriers dwarf those related to other policy restrictions by an order of magnitude or two.
• Malengo is a charity with the ultimate goal of reducing barriers to migration. They provide financial assistance to poor immigrants from Uganda to help them afford the fees necessary for travel, a year of living expenses, and a college education in Germany1.
• The individual benefits of this opportunity are larger than all known2 interventions for both individuals and their families by allowing them access to higher wages, possibly 19x, than they would have in Uganda. A portion of which will likely flow to Ugandans through remittances.
• In addition, spillover effects likely cause dramatic improvement in GDP growth in developing nations. The majority of economic growth in historic migration episodes was actually due to domestic (rather than international migrant) income, indicating that the economic benefits of immigration can be widespread and long-lasting.
• Malengo’s efforts could also inspire developed countries’ government organizations with similar initiatives, which could create more equitable pathways for immigration from developing nations into developed ones.
• Malengo needs more resources such as seed capital, employees & brand awareness building to succeed in its mission.
Introduction
Global poverty doesn’t need an introduction to explain why we want to eradicate it. GDP growth is the most important driving force for ending poverty. Median (typical) household income explains essentially all poverty differences across countries (in levels and over long episodes)3. The estimated global gains from reducing migration barriers dwarf those related to other policy restrictions by an order of magnitude or two. Therefore, our most effective lever for reducing poverty is reducing barriers to migration.
Educational migration can bring significant benefits not just to the individuals who make the journey but also to the communities and countries they leave behind. The new charity Malengo recognizes this and is working to create a more equitable system by providing financial assistance to poor immigrants from Uganda to help them afford the fees necessary to pursue a college education in Germany. By doing so, Malengo is helping immigrants to improve their economic prospects - simple averages4 show that college-educated Germans earn nineteen times as much as high school-educated Ugandans. Assuming Malengo participants earn this full differential, their lives will vastly improve - and they will get to send much-needed remittances back to their families and communities in Uganda. In addition, Malengo's efforts could inspire government organizations to follow suit and help to create a more sustainable pathway for immigration from developing nations to developed nations. Finally, with a sustainable business model that includes an income-sharing agreement to pay back the initial investment, Malengo's intervention is a win-win for everyone involved.
Benefits for Migrants
The benefits of this opportunity for individual immigrants are significant. Not only will a college education improve earnings, but paired with immigration to Germany, the individual likely earns nineteen times as much as they would in Uganda. This increase in income can provide a much-needed boost to the immigrants and their families, helping them to escape poverty and build a better life. In addition, the experience of living and studying in a new country can be personally enriching and provide a chance for personal and professional growth.
According to the 2018 World Happiness Report by Gallup, there is strong correlation evidence to suggest that moving from a poorer nation, like Uganda, to a developed country, like Germany, can significantly improve the happiness of immigrants. The report includes charts that show the predicted happiness levels of people living in different countries, and these charts are overlaid with the realized happiness levels of immigrants after they have moved to Canada and the UK. The results show that the happiness levels of immigrants are much higher in their new countries compared to their home countries and are indistinguishable from the happiness levels of native-born Canadians and Brits. This suggests that the improved economic opportunities and living conditions that come with moving to a developed country can positively impact the well-being and happiness of immigrants.
Benefits for Origin Countries
While the individual benefits of this opportunity for the immigrants are significant, the impact extends beyond just the individuals themselves. One of the most significant benefits is the potential for the immigrants to send remittances back to their families and communities in Uganda. Remittances are money transfers that people make to their loved ones in other countries, and they can be an important source of income for families in developing countries5. In fact, remittances are often the largest source of foreign exchange for many developing countries, and they can help to stimulate economic growth and development.
While the immediate benefits of the financial assistance provided by Malengo are felt by the individual immigrants and family who receive remittances, there are also spillover channels for longer-term benefits for Uganda as a whole. Migration can lead to a virtuous cycle, where more young people see the value in investing in their education and are motivated to pursue higher levels of schooling. This in turn can lead to an increase in the number of educated workers in the country, which can drive economic development and growth.
Malengo’s website summarizes the evidence well, “The spillover effects of Malengo are difficult to predict. However, several studies suggest strong human capital responses to migrant exposure. Bedasso et al. (2020) find an effect of migrant exposure on completing secondary education of 14–17%, and on own future migration of 22%. Abarcar and Theoharides (2021) show that for each nurse who migrates from the Philippines to the USA, nine additional nurses are licensed in the Philippines. … Thus, Malengo students are likely to have significant positive human capital externalities on their families and home communities.”
However, I think the statements above might undersell GDP contributions. The evidence suggests that immigration positively impacts economic development in multiple channels. A study, by Khanna et al (2022), of the 1997 Asian Financial Crisis found that changes in international migrant income in the Philippines led to substantial increases in income in the domestic economy in migrant-origin areas, as well as increases in population education, better-educated migrants, and increased migration in high-skilled jobs. Importantly, the study found that 77.3% of these long-run income gains were due to domestic (rather than international migrant) income, indicating that the economic benefits of immigration can be widespread and long-lasting6. I focus on human capital above because the study's findings suggests that a significant portion of these income gains - 23.2% - was due to increased educational investments in origin areas, but that means 50% of gains are through a plethora of other channels accruing in developing nations. Overall, this evidence suggests that immigration can be a powerful tool for driving economic development and improving the lives of people around the world.
Benefits for Destination Countries
Since there are so many gains for poor nations, many might think this comes at the cost of Germany. However, don’t forget that the workers earn a high wage because they contribute goods and services in Germany! As Germany and other countries around the world face demographic challenges, such as a shrinking working-age population relative to the elderly, there are many potential problems. Specifically, burdens on the health system are increasing as the elderly population grows. On Europe’s current path, the reduced working-age population leads to labor shortages. Leading to the potential for debt problems to arise as the working population shrinks7, leading to reduced tax revenues and potentially unsustainable levels of government borrowing8. These challenges will require careful planning and innovative solutions to address, and this requires a rethinking of traditional approaches to immigration.
It is important to be realistic that the counterfactual immigration scenario is not a lack of immigration but an extremely dangerous and disorderly process. Current migration options for many Sub-Saharan Africans are incredibly risky and, in some cases, life-threatening. The findings from Bah and Batista (2019) illustrate just how motivated immigrants can be even when facing potentially lethal journeys, “On average, respondents estimate at respectively 49% and 40% the probability of dying en route and of obtaining a permit.” Making it clear that migrants are willing to take a huge risk with little guarantee of success9. This is why solutions like Malengo are so important: they provide a secure way for skilled immigrants to enter Europe legally, reducing the burden on migrants and providing them with a more reliable source of income and safe passage to Europe.
If successful, Malengo can reframe immigration as a source of creating highly skilled workers, providing a solution to the demographic challenges faced by many nations. By enabling these immigrants to gain access to higher education in Germany, Malengo is providing an increase in the supply of educated workers, it is impossible to oversell the fact that an immigrant couple developed the Pfizer Covid vaccine. Standard models of economic growth focus on innovation and our best evidence suggests that educated immigrants are positive drivers for innovation and invention. For a taste, Bernstein et al. (2022) state “A simple decomposition illustrates that immigrants are responsible for 36% of aggregate innovation, two-thirds of which is due to their innovation externalities on their native-born collaborators.”
Benefits for Donors
Malengo creates a win-win-win-win10 situation. We have mentioned a win for the immigrants it serves, a win for the sending country in remittances and economic development, and a win the receiving nation of Germany in labor supply and innovation. Let's focus on a win for the charity by using an income-sharing agreement (ISA) to help pay back the financial assistance costs. Under this agreement, the immigrants who receive support from Malengo agree to pay a percentage of their income back to the organization for a set period of time after they graduate and begin working. This helps to ensure that the financial assistance provided by Malengo is sustainable. This approach opens the pathway for Germany (or all developed nations11) to undercut Malengo and offer a lower tax for migration12. With this extra money, political actors would have the leverage to find a compromise for increasing immigration that is more sustainable and equitable.
Malengo’s Costs
To reach its goals, Malengo must prove it can scale up so that government programs that target educational migration have an example to emulate. With this in mind, collecting evidence so that the organization maximizes the impact is in the founding values of the organization. There are dozens of endpoints to estimate: What are student graduation rates? What are student wages in Germany after graduation? Which professions do they pursue? Is Malengo's support adequate for new arrivals? What is the magnitude of remittances? Is the program considered successful in Germany? Is the program considered successful in Uganda? There are dozens of additional questions, and to answer them adequately, Malengo needs to be highly effective. The organization is run by Johannes Haushofer, who has written seminal works on cash transfers as he worked with GiveDirectly. Work is expected to be of the highest quality, but they are constrained because doing this work requires money!
Plain and simple, Malengo requires more resources. One of the biggest challenges is the need for more seed capital to finance the initial cohort of students in Uganda. This initial investment is necessary to get the program off the ground13 and to provide the financial assistance that the immigrants need to afford the fees for their college education in Germany. In addition to this initial investment, there is also a need for more employees and capital to expand the program to new regions, such as France. This expansion will require the organization to build new partnerships and secure additional funding, which can be a challenging process.
Finally, there is the challenge of increasing brand awareness for Malengo to recruit more students and employees. This includes not only raising awareness of the organization's mission and goals but also building a reputation for excellence and attracting top talent. By overcoming these resource constraints and addressing these challenges, Malengo can continue to grow and have a bigger impact on the lives of poor immigrants and the communities they come from.
Conclusion
The definition of success goes beyond just the immediate impact of its financial assistance. The organization's goal is to create a more equitable and sustainable system for educational migration. To that end, it views its own planned obsolescence as a key measure of success. In other words, if the organization can create a system where immigrants are able to pay back the costs of their education and become self-sufficient, and if the receiving nation can benefit from the contributions of highly educated and skilled workers, then Malengo will have achieved its goal. Malengo is working to create a brighter and more equitable future for all by focusing on creating lasting change and building a more sustainable system.
Most people are unaware of Germany’s openness to migration and the opportunity this presents for demonstrating the value of migration. For a longer treatment read https://www.cgdev.org/sites/default/files/maximizing-shared-benefits-legal-migration-pathways.pdf
Known by me. I am happy to hear about other interventions.
I am not going to extensively reference as I am trying to make this conversational. Feel free to inquire for references. However, this sentence is directly copied from https://lantpritchett.org/economic-growth-in-five-figures-one-with-five-variants/
Comparing Ugandan residents with secondary or some tertiary education to German residents with tertiary education in Gallup World Poll.
If you are a fan of GiveDirectly, this intervention (hopefully) provides a similar cash transfer to poor Ugandans. That’s called a Pareto improvement over a very useful program!
I am omitting benefits from higher education in developing nations which is promising in itself! Vu (2022)
I must note that all of these suggestions that robots are a *better* solution to an aging population is deeply offensive to humanitarian sensibilities. Why is the world economizing on the abundant?
There is some controversy about fiscal effects of immigration but these estimates omit the importance of GDP as the denominator of debt-to-GDP ratio and often use a biased estimator for fiscal effects. Aka they don’t count taxes paid by employers. After accounting for this it is likely all skill levels of immigrants improve the debt-to-GDP ratio.
The migrants are actually overestimating the mortality rate and the success rate which are “the probability of dying is 20% while the probability of obtaining a permit is 33%.”
Yup, I am going there.
I focus on immigration to developed nations because this must overcome political barriers but all other benefits are unequivocal. “South-to-South” migration does not have as enormous and obvious benefits as demonstrated by protests around Qatar’s World Cup.
I’d prefer that we didn’t have taxes, but I focus on political reality rather than my preference. Clemens (2014) vs (2019)
Remember that the program will be self-funding through ISAs after initial donations.