Economics of Emigration and the American South

A while ago I posted about the immense benefits of freer migration for migrants, the places they leave, and the places they go. Most research focuses on immigration, and partly as a result there is concern that emigration makes a sending country worse off by reducing its productive capacity. As I outlined in my original post, emigration is a net benefit, and increases growth.

Since then, I came across a paper on emigration and growth in the Southern United States. At the beginning of the 20th century the South was proportionally poorer than the North. Starting in the 1940s, the South grew faster than the North and closed the gap significantly. At the same time, there was large black emigration out of the South.

To get at the causation, Richard Hornbeck and Suresh Naidu of Harvard and Columbia University respectively, look at The Great Mississippi Flood of 1927. 

The flood displaced the low-wage black labor Southern planters depended on. Planters used whatever methods (before and after the flood) to reduce the ability of black labor to leave.

But a large percentage of black labor did not return to flooded areas. Initially, planters substituted black labor for mules and farm animals. But over time, farmers invested in capital equipment and machinery to increase the productivity of their remaining labor. Relative to nearby non-flooded counties (as observably identical as any different locations in space can be) the flooded counties had greater levels of capital and higher labor productivity. Farm sizes began to increase due to the efficiencies of scale of the new capital. The previously flooded areas experienced increased output relative to surrounding areas, and non-flooded counties in flood plains elsewhere in the South.

Starting in the 40s, these trends occurred throughout the South: black emigration, increasing capital investment, farm sizes, and economic growth[1]. Through observing the effects of a flood in Mississippi in 1927, the authors add causation to the correlated increase in emigration and economic growth.

Now a counter argument would be that the prominent concern over the effects of emigration is the emigration of skilled labor, or so-called “brain drain”. But while it’s likely that white labor was on average more skilled (or at least educated), it would be a mistake to think of black labor as homogeneously unskilled. Throughout the history of the plantation economy there was a demand for and a supply of different skill levels of black labor, such as craftsmen and blacksmiths. Empirical evidence shows that the positive effects of emigration outweigh the negative effects of a skilled individual leaving, and this paper, while not focusing on skill levels in particular, generally backs up that conclusion.





1. It's worth mentioning at the same time trends such as the civil rights movement, and civil rights legislation undoubtedly contributed to higher economic growth, especially in the South.