In 2006, about 85 percent of world population lived in low or middle income
developing countries with an average per capita income of $2,000, while only 15 percent
lived in high income developed countries with average per capita income of $36,500
(Martin, 2009). The wage gap between these countries had been astronomical as well –
garments workers in Bangladesh make less than $40 a month, while unskilled workers
in developed countries working at minimum wage make more than that in a day[6].
Migration from South (developing, labor abundant countries) to North (developed,
labor scarce countries) has also been driven by “pull factors”, such as a demographic
shift in the North, by aging population and low birth rates. According to UN (2002),
to maintain their 1995 labor forces, the Big 4 EU countries – France, Germany, Italy
and the UK – needed to increase their immigration to 1.1 million a year, triple of their
existing levels of immigration. With greater labor migration from South to North,
not only efficiency in allocation of labor across countries will improve, it will also
reduce chronic unemployment and poverty in developing countries and redress labor
shortage and reduce cost of production in developed countries.