The existing estimates of the adjustment costs to trade reform are very small, but they are concentrated on particular individuals and so perhaps deserve large weight socially. It is certainly possible that those estimates omit some elements too, such as the disutility of one-off uncertainty and disruption experienced by everyone in adjusting to policy changes.<sup>29</sup> Hence, so as not to exaggerate the net gains from a Doha trade reform, it is assumed here that there would be an adjustment period of eight years following the beginning of liberalization (assumed to be 2008), and that in each of those years the adjustment costs would be 15 percent of the annual comparative static benefits as of 2015 (and zero thereafter) in the high case, and 5 percent in the lower-bound case when much less adjustment would be needed. For the high case that amounts to $71 billion per year during 2008 to 2015 globally, of which $24 billion is expended in developing countries, when expressed in 2005 US dollars by using the projection to 2015 of global GDP provided by the World Bank (2006). For the lower-bound case the costs would be one-third of those values.

# **_Costs associated with increased international migration_**

The migration opportunity also would involve costs. There are the direct one-off costs to migrants of obtaining visas and work permits, transport and transitional expenses, costs of searching for housing, schooling, employment, etc. upon arrival, as well as the emotional cost of separating from extended family and in some cases temporarily breaking up the nuclear family. There are also one-off costs to the host-country government of processing applications and providing initial help with housing, welfare payments and the like.

In terms of adjustment costs in the workplace, in so far as migrants are attracted or recruited to positions for which there is excess demand, they will be reducing underemployment of capital in those industries. Since that is a significant part of the motivation for host countries seeking migrants, especially as their native population is aging rapidly, this may well offset the other costs associated with migration – especially if the skill mix and timing of immigration flows are designed to alleviate such labor shortages. However, to err on the conservative side for the purpose of calculating benefit/cost ratios, it is assumed here there are net costs involved for both the migrants and the host governments’ taxpayers.

Fees charged by private recruitment agencies offer evidence of part of the direct cost of migration to migrants. The World Bank (2006, Table 3.1) cites several studies within the range $700 to $1,700, but one for Thais emigrating to Japan of more than $8,000. Such studies may overstate the true cost of the services actually offered, however, insofar as the agency is able to capture also some of the lifetime benefits expected by the migrant (Abella 2004).

For present purposes, in the absence of reliable estimates of overall costs it is necessary to rely on using a range of guesses. Our low guesstimate is that each migrant worker (and his family) spends on average $7,000 in 2001 US dollars to migrate in the year of migration. To err on the conservative side and allow for significant social costs associated with increased immigration and emigration we have chosen, for the high-cost case, combined costs of three times the low-cost ones, or $21,000 per worker and family in the year of migration. The same-sized average costs

> 29 We should be explicit that we cannot take the distributional dimensions into account more formally in this aggregate analysis, but they obviously matter in the real world. A detailed discussion of the effects of trade liberalisation on poverty is given by Winters (2002) and Winters, McCulloch and McKay (2004).

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