-
In evaluating the impact of remittances, themain subject of this
report, it is important totake into account the implications of
theinitial decision to emigrate. This chapter willanalyze the
implications for migrants and ori-gin countries of migration for
economic gainfrom developing to high-income countries.1
Focusing on this form of migration canhighlight some key policy
dilemmas that gov-ernments face in improving the
developmentalimpact of migration.
Migration is an extremely diverse phenom-enon. Its economic
impact on each origincountry, and the impact of policy, will
dependon many circumstances—among them theskills and former
employment of migrants, thehistory of migration (the existence and
loca-tion of a large diaspora), the sectors affected,patterns of
trade and production, the invest-ment climate, and the size and
geographicallocation of the country. For example, migra-tion
policies appropriate for a large develop-ing country with
substantial low-skilled emi-gration and effective institutions will
differfrom the policies for a small island economywith substantial
high-skilled emigration andweak institutions.
Migration is as complex as it is diverse, sopredicting the
impact of policy changes will beproblematic until more research is
done andbetter data obtained. In particular, the genderimplications
of migration are poorly under-stood and require more research.
Migrationalso has important social and political impli-
cations, that may be as important as the eco-nomic analysis
provided here. For all of thesereasons, the analysis and policy
recommenda-tions in this chapter must remain heavily qual-ified.
Our purpose is to signal to policymakersin developing countries,
and to the develop-ment community in general, the elements
thatshould be considered in formulating migrationpolicy.
International migration often generates greatbenefits for
migrants and their families,although at some risk. Migration can
greatlyincrease incomes of both migrants and theirfamilies and has
helped countless householdsescape poverty. While most workers gain
greatlyfrom migration, the decision to migrate issometimes made
with inadequate informationand at high risk and cost, particularly
if themigration is irregular. By providing informationon migration
opportunities and risks,governments could help avoid
unfortunate,costlymigrationdecisions.Governments shouldalso
consider means to prevent and prosecutetrafficking and other abuse
of migrants, and tostrengthen migration-related partnershipsbetween
origin and destination countries.
Increasing the emigration of low-skilledworkers would
significantly reduce poverty indeveloping countries. In addition to
enablingemigrants to escape poverty and to reducingpoverty in the
country of origin throughremittances (discussed in chapter 5),
low-skilled emigration can increase wages and
57
The Policy Challengesof Migration:The OriginCountries’
Perspective
3
-
reduce unemployment and underemploymentof poor workers in the
country of origin.Many of the poorest lack the financialresources
or the skills required for successfulemigration to high-income
countries, butavailable data indicate that a significantnumber of
them do emigrate, although atlower rates than the non-poor.
Reducing therestrictions on low-skill emigration, whileremaining
sensitive to concerns in desti-nation countries over social
tensions, jobopportunities for low-skilled natives and thepotential
burden on public expenditures, maybest be achieved through managed
migrationprograms designed jointly by origin anddestination
countries. Such programsshould provide for temporary,
low-skilledmigration—with incentives for return.
Emigration of high-skilled workers mayreduce living standards of
those left behind andimpair growth, but can also be beneficial.
Likelow-skilled migration, high-skilled migrationcan greatly
benefit migrants and their familiesand can help relieve labor
market pressures.In addition, a well-educated diaspora canimprove
access to capital, technology,information, foreign exchange, and
businesscontacts for firms in the country of origin. Atthe same
time, high-skilled emigration mayreduce growth in the origin
country because(a) other workers lose the opportunity fortraining
and mutually beneficial exchanges ofideas; (b) opportunities to
achieve economiesof scale in skill-intensive activities may
bereduced; (c) society loses its return on high-skilled workers
trained at public expense; (d)the price of technical services
(where thepotential for substitution of low-skill workersis
limited) may rise. Highly educated citizensmay also help to improve
governance, improvethe quality of debate on public issues,encourage
the education of children, andstrengthen the administrative
capacity of thestate—all of which may be reduced throughemigration
of the highly skilled.
Because of the lack of data and the myriadof individual country
circumstances that can
influence the impact, it is impossible to reli-ably estimate the
net benefit, or cost, to origincountries of high-skilled
emigration. We canonly offer some rough observations that
reflectthe wide variation in high-skilled emigrationrates among
countries:
• Very high rates of high-skilled emigra-tion affect a small
share of developingcountries’ population, and many coun-tries with
high rates of high-skilled emi-gration have poor investment
climatesthat likely limit the productive employ-ment of
high-skilled workers. On theother hand, the lack of
high-skilledworkers may contribute to the poorinvestment climate
and limit the supplyresponse to economic reform.
• Some countries also find it difficult toproductively employ
all high-skilledworkers because of small economic scaleor misguided
educational policies that re-sult in a large supply of college
graduatesfor whom no suitable jobs exist.
• High-skilled emigration has had a severeimpact on public
services with positiveexternalities. The loss of skills
throughhigh-skilled emigration has particularlyimpaired health
services in several devel-oping countries.
Origin countries harmed by high-skilledemigration face
difficulties in managing theproblem. Service requirements for
access topublicly financed education can be evaded andare likely to
discourage return, and proposalsfor the taxation of emigrants to
the benefit ofthe origin country have made little progress.Improved
working conditions in public em-ployment and investments in the
infrastruc-ture for research and development may beeffective in
retaining key workers. Workingconditions can also be improved by
strength-ening governance, which may require politicalwill rather
than money. Origin countries canalso encourage educated emigrants
to returnby identifying job opportunities, cooperatingwith
destination countries that have programsto promote return,
permitting dual nationality,
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
58
-
and helping to facilitate the portability of so-cial insurance
benefits.
The migration decision and itsimpact on migrants and
theirfamilies
Making the costly and sometimes riskydecision to move to another
countrygenerally involves the expectation of largeincreases (or
lower variability) in income,described by economists as the net
presentvalue of lifetime earnings.2 The migrant’s ex-pected income
gain from emigration also re-flects his or her employment prospects
at homeand the likelihood of employment overseas.
Better economic prospects drive migrationMigrants from
developing to high-incomecountries generally enjoy large increases
inearnings.3 A dataset compiled by the Interna-tional Labour
Organization (ILO) shows thatworkers in high-income countries earn
a me-dian wage that is almost five times the levelof that of
workers in low-income countries,
adjusted for differences in purchasing power(Freeman and
Oostendorp 2000) (figure 3.1).These data may overstate the wages
thatmigrants expect, because their earnings, at leastinitially,
tend to be lower than those of natives(Lucas 2004a). Moreover, many
poor workerswho lack local language skills and have mini-mal
education may find limited employmentprospects in high-income
country job markets.On the other hand, these data may understatethe
benefit of migration from the perspectiveof the household. In
measuring differences inwelfare between migrants and those who
donot migrate, migrants’ earnings in high-income countries are
reduced to reflect thehigher cost of living in high-income
countries—or purchasing power parity (PPP). To the ex-tent that
migrants send earnings back home inthe form of remittances,
however, this adjust-ment is not relevant, so household gains
mayexceed the PPP-adjusted rise in earnings.4 Fur-thermore, the
data on income differences mayinfluence expectations of future
earnings formigrants and their children, and would un-doubtedly
generate much larger migration, inthe absence of controls. Evidence
of substan-tial migration pressure includes long queues
ofapplicants for immigration to high-incomecountries, the rise in
irregular immigration,the increase in asylum seekers (Hatton
andWilliamson 2002), and the high fees paid tosmugglers who help
migrants cross bordersillegally (Cornelius 2001).
The expectation of higher earnings is notthe only economic
incentive for migration.Households may decide to send some mem-bers
abroad to diversify the family’s source ofincome and thus reduce
risk, as shocks affect-ing the level of wages and the probability
ofemployment in the destination country maynot be correlated with
the shocks affectingdomestic workers (Daveri and Faini 1999).5
Migration involves considerable costsDespite clear gains for
many, migration involvescosts and risks that, together with
restrictionson migration, help explain why most peopleprefer to
stay at home. Migration can entail
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
59
Source: Freeman and Oostendorp (2000).
Upper-middle-income countries
Lower-middle-income countries
Low-incomecountries
Figure 3.1 Median wage levels for workersin the same occupation,
relative to high-income economies, 1988–92a
0
5
10
30
20
45
Percent
25
15
35
40
Note: Chart reports the median wage in each country/skillgroup
relative to the highest wage for that skill group, withthe ratio in
high-income economies as the numeraire. Thusthe median wage in
low-income countries (averaged acrossskill groups) is 20 percent of
the median wage in high-incomeeconomies.
a. Adjusted for purchasing power parity.
-
substantial up-front costs—transportation, feescharged by
recruitment agencies, fees to obtaina visa and work permit,
maintenance whilesearching for work, forgone earnings (if
themigrant was or could be employed at home),the reduction in value
of location-specific skills(for example, knowing one’s native
language),and the pain of being separated from family andfamiliar
surroundings. Obviously these costswill vary enormously among
migrants.
Lack of data makes it difficult to directlytest the relationship
between costs and the de-cision to migrate. However, distance can
beused as a proxy for costs, representing notonly transport costs,
but also migrants’ lim-ited familiarity with countries of
destination.Adams and Page (2003) find that distance isa
significant determinant of the directionof migration from
developing countries tothe United States, European members of
theOrganisation for Economic Co-operation andDevelopment (OECD),
and the Arab Gulf.Long, Tucker, and Urton (1988) found thatdistance
was an important constraint on inter-nal migration in the United
States and theUnited Kingdom; what holds for internal mi-gration
(without political barriers or languagedifferences, and with
limited cultural differ-ences) probably holds even more strongly
forinternational migration. Household surveysalso provide indirect
evidence that distancehas an important impact on migration:
whilesome of the poorest do migrate internation-ally, they are more
likely to remain at home orto migrate internally (see below).
Among the largest quantifiable costs tomigrants are fees paid to
private recruitmentagencies, whose role in the international
labormarket has increased substantially, in part be-cause of the
rise of temporary labor migrationprograms.6 A major conduit of job
opportuni-ties for migrant workers, private recruitmentagencies
often are instrumental in seeking outnew markets for job
opportunities abroad.They also provide services such as
languagetraining and assistance with settlement (seeXiang 2003 in
the case of China). However,they also can be a source of abuse
(ILO
2003b). Because many migrants lack informa-tion on foreign job
markets, and some agen-cies may have considerable market
power,recruitment agencies have captured a substan-tial share of
the rents generated by limits onimmigration (Lucas 2004a).
Available data(mostly from past years) indicate that recruit-ment
charges range from $689 (in 1995) forSri Lankan immigrants to the
Middle East to$8,000 (in 1996) for Thais seeking work inJapan
(table 3.1).
Recruitment agencies’ potential for earningrents raises the
issue of whether governmentsshould regulate their fees. As
constraints onmigration generate significant excess profits,efforts
to regulate recruitment fees wouldappear to have merit. However,
limitations onthe terms of mutually agreed contracts can
bedifficult to enforce, and excessive regulationcan drive
recruiters underground or lead themto switch to other countries. A
few govern-ments have attempted to regulate fees paid torecruiters,
and require registration and mini-mum capital requirements or
financial guar-antees to limit abuses (ILO 2003a). In
general,successful regulation of recruitment agenciesinvolves a
large pool of potential migrants (toreduce the likelihood of
recruitment agenciesswitching to alternative sources),
effectivegovernment institutions, and regulations thatfocus on the
most egregious abuses (insteadof just reducing the market rate).
Even thePhilippines, considered to have a model
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
60
Table 3.1 Fees charged by recruitmentagencies
Country US$ Year
Migration to the Middle EastBangladesh 1,727 1995India 900
1995Pakistan 768 1995Sri Lanka 689 1995Sri Lanka 893 1986
Migration to JapanThailand �8,000 1996
Migration to MalaysiaThailand 666–1,000 1991
Sources: Abella 2004; Lucas 2004a; Eelens and Speckmann1990;
Spaan 1994.
-
program, experiences difficulties in enforcingfee limits, while
most recruiters, including theUnion of Filipino Overseas Contract
Workers,argue that stringent regulation of recruitersimpairs the
competitive position of Philippinemigrants relative to workers from
other coun-tries (Martin 2005). Destination countriesare probably
in a stronger position to regulaterecruitment agencies
effectively.
Decisions to migrate are often madewith inadequate
informationThe distance and differences in language andculture
between countries of origin and desti-nation imply that migration
is particularlyaffected by inadequate information. Migrantsmay have
a distorted notion of the possibilitiesof employment and the likely
wage in coun-tries of destination, as well as insufficient
in-formation on the costs and potential risks ofthe trip.
Smugglers, recruitment agencies, andothers with a financial stake
in encouragingmigration may present a biased picture of
themigration experience, and poor informationincreases the
potential for migrants to sufferfrom fraud and abuse.7
Some origin-country governments haveattempted to protect their
emigrant workersby regulating the terms of labor contracts.
Forexample, Indonesia, the Philippines, and SriLanka have drafted
model contracts for vari-ous occupations and host countries that
detailworking terms and conditions to be specifiedin advance
(Abella 1997). Such efforts can beuseful in articulating standards
and informingmigrants of their rights. However, enforcementof such
contracts in destination countries canbe problematic (IOM 2003).
The Philippines,India, and Bangladesh review contracts priorto
migrants’ departure, and Bangladesh veri-fies the genuineness of
overseas work visas.Some countries have entered into
bilateralagreements that require destination countriesto issue
visas only if the contract is approvedby the origin country.
Restrictive policies ofthis kind run the risk of encouraging
irregularmigration if workers cannot secure approvalof contracts in
advance. Some countries use fi-
nancial incentives, such as special exemptionsfrom travel taxes
for those who clear contractswith government agencies, to
facilitate govern-ment review of contracts. Some countries
withlarge numbers of emigrants offer a compre-hensive set of
services, including predeparturetraining, information on labor
markets in des-tination countries, legal services,8 reintegra-tion
support, and welfare funds financed fromfees paid to origin-country
governments bydeparting workers.9
A diaspora can reduce the costsfacing migrantsThe stock of
emigrants in countries of destina-tion can reduce the costs facing
new migrantsfrom the same origin country. The majorcountries of
origin with significant diasporasin high-income countries (figure
3.2) are forthe United States: China, Cuba, El Salvador,India,
Mexico, Philippines, and Vietnam; andin other countries: Turkey
(for Germany);Serbia and Montenegro, Morocco, and Algeria(for
France); and China (for Japan andCanada). As migrant networks
spread, privateinstitutions and voluntary associations emergeto
provide a range of services, including coun-seling, social
services, and legal advice; lodg-ing, credit and job search
assistance; and themeans to reduce the cost of undocumented
mi-gration, including smuggling and transport,counterfeit
documents, and arranged mar-riages (Massey and others 1993). The
migrantdiaspora can also reduce the likelihood of, andfears
concerning, abuse (see Gunatilleke 1998for the example of Sri
Lanka).
Evidence of how the diaspora encouragesmigration can be seen in
the grouping ofimmigrants from the same country or localregion in
countries of destination. Bartel(1989) and Jaeger (2000) find that
U.S. immi-grants tend to move near former immigrants ofthe same
ethnicity. Munshi (2003) finds that anindividual is more likely to
be employed and tohold a higher paying nonagricultural job whena
large number of migrants from his homecommunity are in the United
States.10 Studiesof the Asia Pacific region have shown that
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
61
-
networks raise migration rates once a few ini-tial migrants are
established in destinationcountries (Massey and others 1998).
Irregular migration is often subjectto substantial costs and
risksIrregular migration appears to have increasedsignificantly in
major countries of destination,although the estimates are
unreliable. Theestimates are based typically on the
differencesbetween census reports and other immigrantregistries,
arrests at the border or internally,and regularization programs
(Jandl 2004).11
Irregular migration may have doubled in theUnited States between
1990 and 2000, andmay now account for some nine million peo-ple
(Passel, Capps, and Fix 2004)—about25 percent of the total stock of
migrants. Thescale of irregular migration in Europe mayalso be
high. Just under 700,000 irregular mi-grants applied for
regularization under the re-cent amnesty drive in Spain. Mid-range
esti-mates provided by Jandl (2003) indicate thatirregular migrants
range from less than 10percent of the total reported stock of
migrantsin France to 60 percent in Greece (figure 3.3).
Most irregular migrants are low-skilledbecause (a) immigration
laws in high-income
countries provide high-skilled workers withgreater opportunities
for legal entry andresidence, and (b) it is more difficult for
high-skilled workers to practice their professionswithout adequate
documentation, such as edu-cational credentials (Chiswick 2000).
Also,skilled migrants often have more to lose athome and may be
less inclined to run the risksinvolved in irregular migration.
Irregular
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
62
% of reported migrant stock
Source: Medium estimates from Jandl 2003.
Note: See note 11 at the end of this chapter for a definition
of“irregular” in this context.
Fran
ce
Figure 3.3 Estimates of stock of irregularmigration
Germ
any
Gree
ceIta
ly
Switz
erlan
d
Unite
d
King
dom
0
20
10
30
50
70
60
40
Figure 3.2 Major developing country diasporas in developed
countries
Millions of people
Major diasporas in the United States Other major diasporas
Millions of people
0
2
4
6
8
10
12
Mex
ico
Philip
pines
India
China
El S
alvad
orCu
ba
Viet
nam
Turk
s in
Germ
any
Serb
ians
in Fr
ance
Mor
occa
ns
in Fr
ance
Alge
rians
in Fr
ance
Chine
se in
Japa
n
Chine
se in
Cana
da
0
0.5
1.5
1
2
Source: OECD 2004.
Note: Data from the United States are based on country of birth,
while most European migration data are based on nationality.
-
migrants also tend to be temporary, rather thanpermanent,
immigrants (Carter 1999).12
Irregular migration imposes substantialcosts on migrants,
compared with permanentmigration. It can be more expensive: the
aver-age price in 1991 for smuggling an illegalmigrant from China
to the United States wasestimated at $30,000 and from $3,750
to$12,000 for migrants smuggled to Lithuania(Salt and Stein 1997).
Irregular migrants canalso be paid low wages, have poor
workingconditions, and be subject to violations of theprotections
afforded under industrial-countrylabor laws (Vayrynen 2003).
Employers maybe able to pay irregular migrants less thanlegal
migrants and natives because only cer-tain employers will hire
irregular migrants, orbecause the migrants are reluctant to
moveaway from support networks. Lower pay andhigher costs of
migration also make irregularmigration less desirable for the
origin country,because they cut into remittances. Remittancescan be
reduced by the relatively expensivemoney transfer operations used
by irregularmigrants who lack access to bank accounts(see chapter
6).
Irregular migrants can also be exposedto physical danger. Since
1994 an estimated2,600 undocumented migrants have diedcrossing the
United States–Mexico border(Meek 2003). Entrapment into
prostitutionis a danger for women and children (Wickra-masekera
2002). Trafficking in persons isestimated globally to involve some
600,000 to800,000 men, women, and children each year(U.S.
Department of State 2004). Differentnational policies toward
migration controlmake it difficult to combat trafficking
andsmuggling, although the international proto-cols against these
activities provide a commoninstrument to criminalize them.13
Severalgovernments, notably in Southeast Asia, haveinstituted
restrictions on the emigration ofwomen, fearing their exploitation.
Unskilledand semi-skilled women are allowed to emi-grate from
Bangladesh only when accompa-nied by a male partner (Siddiqui
2003). Suchoutright bans, in addition to being limitations
on what is generally viewed as a basic right toemigrate, are
likely to be counterproductive:they may compel many women to move
asundocumented migrants, thus increasing theirvulnerability (Misra
and Rosenberg 2003).More comprehensive, cooperative policies
bygovernments are likely to have a more positiveeffect, including
the dissemination of informa-tion on the risks of migration,
strengthenedprotection for women in destination coun-tries, and
stepped-up identification and prose-cution of traffickers.
Migration agreementsbetween countries of origin, transit, and
desti-nation can help achieve such policy coherence(as in the
bilateral agreements between someEU states and Morocco and Tunisia,
forexample).
There are costs for those left behindFinally, migration may
impose costs on familymembers left behind, particularly
children.For example, Battistella and Conaco (1996)find that the
children of migrant parents fromLuzon, Philippines, performed worse
in schooland tended to be less socially adjusted (partic-ularly if
the mother had emigrated) than chil-dren with both parents at home.
On the otherhand, Bryant (2005) found that the improve-ment in the
children’s health and schooling (fi-nanced by remittances), coupled
with stronginvolvement of the extended family, tended tomitigate
the social costs of a parent’s migra-tion. In general, emigration
does impose hard-ships on family members left behind, but italso
improves household income and im-proves families’ ability to make
compensatingadjustments that mitigate those hardships.14
The impact of international migrationon countries of origin
variesThe impact of migration on countries of originvaries greatly,
depending on the size of emi-grant flows, the kinds of migrants,
and laborand product market conditions in the country.In describing
these effects, it is useful to dis-tinguish between skill levels,
given the differ-ences in the labor markets for low- and
high-skilled workers.
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
63
-
Low-skilled migrationLow-skilled migration can improve
labormarket conditions for other poor workersThe stock of
low-skilled emigrants who movedfrom developing to industrial
countries in 2000averaged about 0.8 percent of developingcountries’
low-skilled, working-age residents—about the same as in 1990. The
regions withcountries close to the major destination coun-tries had
relatively high rates of low-skilledemigration (figure 3.4).15
The effects of South–North migration onworking conditions for
low-skilled workers inthe developing world as a whole must besmall.
In individual countries, however, large-scale emigration can place
increased pressureon wages or reduce unemployment of low-skilled
workers at the margin. For example,real wages in Pakistan’s
construction sectorand the Philippines’ manufacturing sectorclosely
trace the deployment of overseasworkers (Majid 2000; Gazdar
2003).16 Low-skill emigration also may reduce underem-ployment or
raise labor-market participationwithout significant wage increases.
Wagetrends in Albania, Bangladesh, and Sri Lanka,for example,
display no obvious signs of
improvement, despite massive emigration(Lucas 2004a). The wage
response to emigra-tion depends on the institutional setting inthe
labor market in the home country (such asthe role of unions, public
sector employment,and minimum wage laws); the extent of emi-gration
relative to the domestic labor force;and the degree to which
emigrants were pro-ductively employed before migrating.
The impact of international migration maydiffer considerably
among regions withincountries of origin, depending on the degree
ofgeographic concentration of emigration andthe links with other
regions through internalmigration. People in regions lying close to
acommon border with the destination countryor with easier access to
overseas markets (suchas metropolitan centers or coastal areas)
havea tendency to migrate (Long, Tucker, andUrton 1988; Malmberg
1997). These effectscan be greatly magnified through the
influenceof migrant networks, once initiated from aspecific
location (Gunatilleke 1998; Shah1998). Internal migration to areas
of high de-parture can be quite important to the trickle-down
benefits of international migration, andinternal migration also can
have an importantpoverty-reducing impact (box 3.1).
Migration of low-skilled workersis usually beneficialWhether
emigration results in reduced under-employment, increased
labor-market partici-pation, or higher wages, low-skilled workersin
the home labor market gain, either directlyor indirectly, from
additional remittancespending. Emigration of low-skilled
workersthus can act as a safety valve for the failure tocreate
appropriate employment at home.There have been cases, however,
usually in thecontext of South–South migration, wherelarge outflows
of temporary or irregular work-ers have resulted in massive return
flows dueto economic or political shocks in destinationcountries.17
Also, reliance on large-scale emi-gration may retard efforts to
address the issueof employment expansion over the longterm, as a
result of either the remittance-driven
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
64
% of low-skilled workers in home region
Source: Docquier and Marfouk 2004.
Figure 3.4 Emigration rates for low-skilledworkers
0
2
4
1
3
1.5
3.5
0.5
2.5
Euro
pe a
nd
Cent
ral A
sia
Latin
Am
erica
and
Carib
bean
Midd
le Ea
st an
d
North
Afri
ca
East
Asia
and
Pacif
ic
Sout
h As
ia
Sub-
Saha
ran
Afric
a
-
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
65
Although internal migration is much larger thaninternational
migration, they are in some re-spects similar phenomena. Both are
largely driven byeconomic disparities among regions, although
con-flict and natural disasters (not discussed here) canalso
catalyze large movements of people. Both inter-nal and
international migration can be permanent ortemporary, voluntary or
forced. Both can subject mi-grants to substantial risks. Both can
result in im-proved labor conditions in the regions of
origin.Internal migration in Bangladesh, for example,makes more
rural land available for tenancy(Afsar 2003). While the risks are
often higherwith international migration (particularly forirregular
migrants), internal migration can also beplagued by trafficking of
persons, particularly ofwomen and children, as evident in parts of
Sub-Saharan Africa (Black 2004) and in India and China(Lee
2005).
Internal and international migration also havetheir differences.
Wage differentials are often lowerwithin countries than between
countries, reflectingsmaller differences in economic conditions
withincountries than between countries.
Internal migration may have a larger role inreducing poverty
than does international migration.While the expected wage gain is
lower in internalmigration, poor workers may have a better chanceof
finding work domestically than in economies withhigher wages, where
workers’ lack of skills and lan-guage ability restrict job
opportunities. Moreover,international migration tends to be more
costly, sothe poorest workers may not be able to afford it.While
data are sparse, household surveys in a fewcountries indicate the
important impact that internalmigration has on poverty. In Sierra
Leone, internalremittances helped reduce income inequality in
poorareas in the 1980s (Black and others 2004). In theAsia Pacific
region, international remittances accruedisproportionately to
richer regions, while domestictransfers are directed mostly to
poorer regions (UN-
Box 3.1 Internal versus international migrationESCAP 2003). In
Ghana, internal remittances are esti-mated to reduce the level of
poverty by 14 percent,compared with only 5 percent for
internationalremittances (Adams 2005).
Internal migration can have large costs on receivingareas. The
proliferation of HIV/AIDs in Ghana hasbeen linked to the movement
of women from rural tourban areas, where unemployment and poverty
oftenforce them into the unprotected sex trade (Black2004b). In
some countries, internal migration to thecities has been so massive
as to increase crowding andplace inordinate burdens on public
services, whichlowers the quality of urban life.a
Internal migration often responds to substantialemigration
abroad. In the Philippines, there are indica-tions of large
movements from rural areas of thePhilippines into the Manila region
from which mostoverseas workers are drawn, although this
movementappears to have done little to help sustain wages inrural
areas (Saith 1997). Bangladesh has seen rapid re-sponses of
intra-village migration to replace departingworkers (Mahmud 1989).
At the same time, as inter-nal migrants gain skills, resources,
information, andnetwork contacts, they often emigrate
internationally.For example, workers displaced by falling
agriculturalprices in southern Mexico often moved to northerntowns
to work in maquiladoras, later moving to theUnited States.
The links between internal and international migra-tion are
inadequately understood, in part becausebasic data are lacking. To
gather more data, it hasbeen recommended that a migration module in
demo-graphic and health surveys, censuses, household in-come and
expenditure surveys, and labor force surveysbe included (Afsar
2005).
aIn China, for example, rapid urbanization has been accom-panied
by the emergence of urban enclaves of landless, unem-ployed
migrants from rural areas (Pan 2004).
-
exchange-rate appreciation or the reducedpressure for policy
reform. In general, how-ever, the opportunity to send
low-skilledworkers abroad provides substantial benefitsto origin
countries because of the impact onlabor markets and
remittances.
Low-skilled migration has contributedto poverty alleviationThe
reduced supply of low-skilled workersmay help to alleviate poverty,
if as a result ofemigration, poor people receive higher wagesor
find new opportunities to work or receiveremittances (see chapter
5). Low-skilled emi-gration also alleviates poverty to the
extentthat the people emigrating are poor.18 It isunlikely,
however, that a large proportion ofmigrants to industrial countries
are pooraccording to the World Bank’s definitionof poverty as
living on less than $2 a day—although certainly a very large share
is poorcompared to even the poorest in high-incomecountries. Most
migrants from Mexico to theUnited States come from households
located atthe middle and upper-middle levels of the in-come
distribution (Rivera 2005). Individualswith very low incomes are
unlikely to be ableto obtain the financial resources necessary
formigration (see, for example, Mahmud 1989for Bangladesh). Most of
the world’s poor peo-ple live in countries that are far away from
in-dustrial countries (Bangladesh, Brazil, China,India, Indonesia,
and most of the countries ofSub-Saharan Africa), so transportation
is ex-pensive. Moreover, many poor people lack therudimentary
skills required to obtain a job inindustrial countries, as well as
the social net-works that would facilitate migration and pro-vide
assistance once in the destination country.
Nevertheless, the limited data indicate thatthe very poor do
move abroad to some extent.In Sri Lanka, returns from household
surveysshow that the share of households with a fam-ily member
abroad is approximately equalacross income groups.19 Adams (2004)
pro-vides model-based estimates implying thatabout 5 percent of
Guatemalan householdswith incomes of less than $2 a day
received
remittances from abroad (used here as a proxyfor having a
household member who emi-grated). Adams (2005) shows that less
than8 percent of Ghanaian households that re-ceived international
remittances had estimatedincomes (excluding remittances) that
fellwithin the first to fourth deciles of householdsby per capita
expenditures; 55 percent had ex-penditures in the top three
deciles. Lucas(2004a) quotes studies of Kerala (India), Pak-istan,
the Philippines, and Thailand to supporta conclusion that most
emigrants were notfrom the lowest income levels, although
thepoorest did participate to some extent.
High-skilled emigrationThere is a sharp increase in
high-skilledmigrationThe emigration of high-skilled workers
fromdeveloping countries has increased since the1970s.20 By 1990,
the stock of high-skilledSouth–North migrants in the United
Statesalone was more than eight times the totalnumber of
high-skilled migrants from devel-oping to industrial countries over
the 1961–72period, not counting foreign students(Docquier and
Rapoport 2004). The numberof highly educated emigrants from
developingcountries residing in OECD countries doubledfrom 1990 to
2000, compared to an approxi-mate 50 percent rise in the number of
devel-oping-country emigrants with only a primaryeducation
(Docquier and Marfouk 2004).
Rates of high-skill emigration vary enor-mously among developing
countries, from lessthan 1 percent (Turkmenistan) to almost90
percent (Suriname) and by region, from15 percent for Sub-Saharan
Africa to 5 per-cent for Europe and Central Asia (figure 3.5).It is
important to keep in mind this degree ofdiversity, as high-skill
emigration can havevery different effects, depending on the sizeand
economic conditions in origin countries.
The increase in high-skilled migration ispartly due to the
growing importance ofselective immigration policies first
introduced
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
66
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in Australia and Canada in the 1980s andlater in other OECD
countries.21 Major re-cruiting countries have increased their
intakeof skilled migrants and relaxed their criteriarelating to
labor-market testing and job offers.Some countries (for example,
Germany,Norway, and the United Kingdom) have intro-duced new
programs; others (such as Austria,Republic of Korea, the
Netherlands, andSweden) offer fiscal incentives to attract talentto
specific sectors (OECD 2005). These pro-grams, and the migrants
themselves, are re-sponding to rising skill premiums in
industrialcountries that have tightened global competi-tion for
skilled workers.
In some instances, high-skilled emigrationhas a negative impact
on living standardsof those left behind and on growthThere are
several reasons that migration ofhigh-skilled workers may decrease
living stan-dards and growth. First, the total return toeducation
may be greater than the privatereturn, because highly educated
workers maybe more productive when interacting withsimilar workers,
and they may help train otherworkers. One statistical measure of
the bene-ficial impact of high-skilled immigrants isthat in the
United States, both international
graduate students and skilled immigrants werefound to be
positively correlated with patentapplications (Chellaraj, Maskus,
and Mattoo2005). Highly educated citizens may alsomake
contributions to public goods—for ex-ample, in improving governance
and strength-ening the administrative capacity of thestate—which
may be lost through high-skilledemigration (McMahon 1999).
Second, the productivity of firms mayincrease with size. If
large firms require net-works of professionals with specialized
skills,then overall productivity will be higher withmany
professionals. For example, the value oftelephone networks
increases with the numberof people connected. Expanding
networksefficiently may require highly technical skills.
Third, emigration of high-skilled workersmay impose a fiscal
cost. In most developingcountries education is heavily subsidized
bythe state, so that the permanent emigration ofeducated workers
represents a loss of fiscalrevenues.22
Finally, emigration of high-skilled workerswill increase the
price of services that requiretechnical skills. It is difficult to
provide com-parable levels of service with low-skilled work-ers,
and greater resources devoted to trainingmay be lost through
further emigration.
But high-skilled migration is oftenbeneficial for origin
countriesThe costs of high-skilled emigration shouldbe evaluated
against the beneficial effects ofmigration, skilled and unskilled:
increased re-mittances, higher wages (for migrants andworkers who
stay home), and benefits to des-tination countries (see chapter 2).
Moreover,high-skilled emigration will have a limited im-pact if it
is difficult for high-skilled workers tofind productive employment
in the country oforigin. This may be the case for three
reasons.First, the investment climate may be so poor,because of
political instability or other rea-sons, that many high-skilled
workers cannotpursue their professions. Even under such
con-ditions, however, high-skilled emigration maybe harmful if it
deprives the government of
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
67
% of total tertiary-educated population
Source: Docquier and Marfouk 2004.
Figure 3.5 Emigration rates for those witha tertiary education,
2000
0
8
16
4
12
6
14
2
10
East
Asia
and
Pacif
ic
Euro
pe a
nd
Cent
ral A
sia
Latin
Am
erica
and
Carib
bean
Midd
le Ea
st an
d
North
Afri
ca
Sout
h As
ia
Sub-
Saha
ran
Afric
a
-
competent administrators and limits theprospects for growth once
the investmentclimate improves. Second, a significant pro-portion
of high-skilled workers may not betrained in professions required
by the econ-omy, perhaps because of government subsidypolicies. And
third, some of the smallest de-veloping countries lack the economic
scale toproductively employ a large number of spe-cialized
professionals.23 These issues serve tounderscore concerns over the
appropriatenessof state subsidization of university educationin
many countries.24
Some recent articles have claimed thathigh-skilled emigration,
even of productivelyemployed workers, may benefit development.The
opportunity to emigrate increases the re-turns to education,
leading more individuals toinvest in education with a view to
emigrating.However, only some of the educated peoplewill actually
emigrate. If the increase in humancapital of those unable to
emigrate exceeds theloss from those who do emigrate, then
soci-ety’s human capital rises following the openingof emigration
opportunities (a phenomenonknown as the “brain gain”).25 The effect
willbe largest in countries with large stocks ofemigrants (so that
the probability of emigra-tion is high). These models have
beenquestioned, however, because they assume thatforeign firms are
not able to discriminateamong educated workers (otherwise theywould
take the best qualified, and so destroyincentives for education by
marginal candi-dates), and because these models do not applywhere
family reunification programs, unre-lated to the skills,
predominate (Schiff 2005).
Findings on the impact of high-skilledemigration are mixedIt is
difficult to generalize about the impact ofskilled migration. The
dispute over gains andlosses has remained largely conjectural
andhas not been settled by the available empiricalstudies. On
balance, it is not possible at pre-sent to provide an aggregate,
reliable estimateof the true impact of high-skilled emigration.Some
partial conclusions follow.
The available data indicate that high ratesof high-skill
emigration affect only a smallshare of developing countries’
population. Adata set developed by Docquier and Marfouk(2004)
indicates that the 77 countries withhigh-skilled emigration rates
(to industrialcountries) in excess of 10 percent account foronly
one-quarter of developing-country popu-lation (table 3.2).26
Moreover, about half ofthese people live in countries with very
poorinvestment climates (included in the bottom25 percent of
developing countries, as mea-sured by the United Nations’ Human
Devel-opment Index), which may indicate that manyhigh-skilled
workers face limited opportunitiesto practice their professions. It
is important tonote that these data do not distinguish by
pro-fession (even though high emigration rates forliterature
professors and physicians wouldhave different economic impacts) or
by quality(the emigration of a Nobel laureate physicistwould
represent a greater loss than the emi-gration of an average
university graduate).
Some countries encourage skilled migra-tion. China, Cuba, India,
the Philippines, SriLanka, and Vietnam all have programs
tofacilitate training for migration, suggestingthat some
policymakers see the benefits ofskilled migration—among them
remittances,relieving job market pressures, developmentof an
extensive diaspora, and expectationsthat many migrants will
eventually returnwith improved skills (as discussed below).
Direct, cross-country tests of the relation-ship between
high-skilled emigration andgrowth have been mixed. The
preponderanceof evidence supports the view that education
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
68
Table 3.2 Emigration rates of skilledworkers, 2000Percentage of
workers with tertiary education living abroad
Less than 10% to 20% to More than10% 20% 30% 30%
Number of countries 62 33 16 28Share of developing 75 19 3 3
country population (%)
Source: Docquier and Marfouk 2004.
-
makes an important contribution to growth.27
Beine, Docquier, and Rapoport (2001) de-tected a positive and
significant impact onhuman capital formation from the opportu-nity
for emigration, whereas Faini (2003)found that a higher probability
of migrationfor workers with secondary education had novisible
impact on secondary educationalachievement in the home country.
High-skilled emigration has had enormousimpact on some sectors,
especially healthThe sectoral distribution of high-skilled
emi-grants is important for assessing the implica-tions for
countries of origin. Meyer andBrown (1999) estimate that about 12
percentof developing-country nationals trained in sci-ence and
technology live in the United States.If accurate, these estimates
suggest that high-skilled emigration may be much more seriousfor
production than shown by the data fromDocquier and Marfouk (2004)
given above,where total high-skilled emigration to indus-trial
countries was estimated at about 8 per-cent of the stock of
high-skilled developing-country nationals.
High-skilled emigration may have a partic-ularly severe impact
on the health sector, andthe emigration of doctors and nurses may
re-duce the likelihood of some countries meetingthe Millennium
Development Goals for re-ducing child mortality, improving
maternalhealth, and combating HIV/AIDS and tubercu-losis. Chanda
(2001) estimates that at least 12percent of the doctors trained in
India live inthe United Kingdom, that Ethiopia lost half ofits
pathology graduates from 1984 to 1996,that Pakistan loses half of
its medical schoolgraduates every year; and that in Ghana onlyabout
one-third of medical school graduatesremain in the country. Perhaps
one-half of thegraduates of South African medical schoolsemigrate
to high-income countries (Pang,Lansang, and Haines 2002), and
Jamaicahad to train five doctors, and Grenada 22, tokeep just one
(Stalker 1994).28 Of course, theincentive for migration is often
conditionednot only by the opportunity for higher earnings
abroad, but also by poor working conditionsand public sector
services in origin countries.
Origin countries face considerabledifficulties in limiting
high-skilledemigrationEven if high-skilled emigration were found
tobe detrimental to living standards and growth,countries of origin
would face serious ob-stacles in reducing it. Some countries
haverequired that graduates of publicly fundededucation work for a
period of time in publicsector jobs. But such requirements can
beevaded, and their existence is likely to discour-age return of
migrants to the country of origin.Several proposals have been made
for interna-tional schemes to tax high-skilled emigrants,with the
funds earmarked for developing coun-tries. Such schemes have made
no progress, asthey would be hard to enforce. Calculating
thewelfare loss from high-skilled emigration andthus setting an
appropriate level of tax wouldbe difficult. Moreover, the schemes
wouldrequire the cooperation of migrants and coun-tries of
destination—something not likely to beachieved. Bhaghwati (1976)
advocates thatdeveloping countries should subject their na-tionals
working abroad to local taxes, as doesthe United States. However,
many developingcountries would find such a system of
taxationdifficult to administer.
Some governments encourage skilled work-ers to stay by improving
working conditions,providing research facilities, and giving
incen-tives for research (see the discussion of incen-tives for
return, below). China has reporteda nine-fold increase from 1995 to
2003 inforeign programs offered in cooperation withlocal
institutions, which has resulted in lowernumbers of students going
abroad (Vincent-Lancrin 2004). Such programs may requiresubstantial
resources, and poorer countrieswill face difficulties in creating
the conditionsrequired to retain their most-skilled workers.In some
cases improvements in governance,which may require political
determinationrather than large expenditures, may help toretain
workers.
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
69
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Cooperation from destination countriesmay helpEffective means of
limiting high-skilled emi-gration, or increasing its benefits, will
requirethe cooperation of countries of destination.One example has
been the United Kingdom’scode of practice for the international
recruit-ment of health-care workers, which restrictsthe active
solicitation of health care profes-sionals from developing
countries. However,implementation has been difficult because
thecode does not apply to private sector recruiters(House of
Commons 2004). A recent proposalto require countries of destination
to provideCaribbean countries with subsidies for train-ing health
professionals could increase thesupply of health workers in both
origin anddestination countries (Commonwealth Secre-tariat 2005).29
More broadly, contributions bydestination countries to education in
origincountries could both compensate origin-country governments
for their training of emi-grants and improve the qualifications of
work-ers coming to destination countries. Anotherapproach, which
would improve the coherenceof development policies, would be for
destina-tion countries to increase their investment insectors in
which they lack skills, rather than“raiding” those skills from poor
countries.
DiasporasA large diaspora can expand marketaccess for origin
countries A potent benefit of high-skilled emigration isthe
creation of a large, well-educated diaspora,which improves access
to capital, information,and contacts for firms in countries of
origin. Im-migrants play a role in facilitating trade by pro-viding
information and helping to enforce con-tracts (Rauch and Trindade
1999) and by actingas intermediaries that can match buyers with
re-liable local suppliers (Yusuf 2001). Johnson andSedaca (2004)
emphasize that diasporas can actas “first movers” who catalyze
growth oppor-tunities and make connections between marketsthat
otherwise would not exist. Barré and oth-ers (2003) cite the
importance of diasporas in
generating possibilities for codevelopment be-tween firms in the
countries of origin and desti-nation, and expanding technical
cooperation.With the growth of outsourcing of manufactur-ing
components and telecommunications andother services, diaspora
networks may be of in-creasing importance. However, despite
thebroad agreement on the importance of diaspo-ras and the many
anecdotal comments on howthey have assisted development, it is
difficult toquantify these benefits.
The diaspora can be a significant source offoreign-exchange
earnings (beyond remit-tances) for countries with sizeable
emigration.Orozco (2003) documents diaspora-relatedincreases in
exports and tourism receipts forCentral America. Gould (1994) and
Headand Ries (1998) found that increased emigra-tion to the United
States and Canada raisedexports from countries of origin.
There is some evidence that the diasporaplays an important role
in the transfer ofknowledge between destination and
origincountries. Agrawal, Cockburn, and McHale(2003) find that
patent applications are likelyto be filed in both the country of
residence andthe country of origin. Meyer and Brown (1999)and Brown
(2000) identify Internet-based ex-patriate networks of skilled
professionals andstudents that facilitate the transfer of
knowl-edge. However, the effectiveness of these net-works is open
to question: less than half of the61 Internet-based networks
examined in 2004were updated regularly, and only 56 percentwere
updated within the past year.30 Origin-country governments can help
maintain ties tothe diaspora by supporting professional net-works,
promoting dialogue with government,and funding educational,
linguistic, and cul-tural programs.
The return of expatriates canbenefit development
The return of expatriates to their homecountry is widely
perceived as benefittingdevelopment (Ellerman 2003). Expatriates
may
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
70
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be more effective than foreigners in transfer-ring knowledge
back home because of theirunderstanding of local culture. However,
re-turnees may also represent retirees, or the less-skilled of the
skilled cohort of emigrants(Borjas and Bratsberg 1994; Lowell
andFindlay 2001), or may have difficulties inreadapting to the home
country (Faini 2003),or their skills may have deteriorated
whileabroad (Ghosh 1996). Returnees may be thosedisappointed by the
wages or working condi-tions or may have more difficulty in finding
orretaining jobs.31
A range of programs have been establishedto encourage return of
highly educated na-tionals living abroad, with mixed results.Among
developing-country governments, forexample, China, the Philippines,
Taiwan(China), Thailand, and Tunisia have offered awide range of
incentives, including researchfunding, access to foreign exchange,
expandedreal estate investment options, and
studyopportunities.32
The domestic policy environment is criticalto productive return.
Cervantes and Guellec(2002) cite the favorable impact of
returningexpatriates in the Republic of Korea, attractedby strong
research and development (R&D)environments and infrastructure
investments.Industrial parks helped to lure entrepreneursback to
China. In Taiwan (China), the HsinchuIndustrial Park attracted more
than 5,000returning scientists in 2000 alone (Saxenian2002).
Conversely, a poor investment climatewill inhibit return. In
Armenia, barriers toforeign direct investment (FDI) and inade-quate
enforcement of contracts have preventeda more active involvement of
the Armenian di-aspora in local development (Gevorkyan andGrigorian
2003). Saxenian (2000) cites the re-luctance of Indian
entrepreneurs to return be-cause of government regulations that
increasethe administrative cost of operating abusiness—although the
Indian diaspora hascontributed to the development of
informationtechnology in Bangalore.33
Both origin and destination countries canhelp facilitate return,
on both a temporary and
permanent basis, through changes in regu-laion. Both can allow
dual citizenship, anincreasingly common practice (Aleinikoff
andKlusmeyer 2002). Origin countries can elimi-nate rules that
prevent emigrants from owningor investing in property back home.
Permanentresidents can be protected from losing theirstatus if they
leave for a relatively limited pe-riod of time, as this discourages
productivetemporary returns to the origin country.Destination
countries can also allow returningmigrants to benefit from the
rights they acquireduring their work abroad, such as
pensions,health insurance, and disability programs(Holzmann,
Koettl, and Chernetsky 2005).34
Such arrangements, however, require effectiveinstitutions in the
origin country to providesuch services and are best achieved
through ne-gotiations between origin and destinationcountries.
Destination countries have provided variousincentives for the
return of migrants. For exam-ple, France has provided loans and
technicalassistance to migrants from Mali and Senegalto establish
businesses in their home countries.However, few of the businesses
appear to havebeen successful, either because of the inade-quate
investment climate in the recipient com-munities (Gubert 2005) or
because participantshad worked in low-level jobs in France
andlacked entrepreneurial skills (Magoni 2004).Many of these
programs are quite small.35
International organizations, too, have man-aged programs to
promote return, althoughthey tend to cover few emigrants. The
IOM’sReturn of Qualified African Nationals pro-gram successfully
attracted more than 2,000highly skilled persons back to 41
Africancountries from 1974 to 1990, and the pro-gram was later
expanded to the Migration forDevelopment in Africa program
(MIDA).36
Similar programs have been run for LatinAmerican countries,
Afghanistan, andBosnia and Herzegovina.37 The United Na-tions
Development Programme’s TOKTENproject promotes temporary return
(three-week to three-month development assign-ments), which is
often easier to achieve.
T H E P O L I C Y C H A L L E N G E S O F M I G R A T I O N
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Temporary migration andinternational agreements
The number of temporary workers admit-ted to high-income
countries under skill-based programs rose substantially in
the1990s, doubling in the United Kingdom andalmost quadrupling in
the United States (fig-ure 3.6). Foreign student programs are
alsoproliferating, in part due to competitive mar-keting and entry
policies by Australia,Canada, Germany, and the United
Kingdom.Inflows of unskilled, seasonal workers alsohave increased
since the early 1990s in mosthigh-income countries that have such
pro-grams (UN 2004). Greater emphasis on tem-porary migration may
reflect opposition toexpanding permanent migration.
Temporary labor migration schemes varygreatly from country to
country. Skilled mi-grants tend to have more opportunities
underunilateral visa programs (such as the U.S. H-1B visa and the
temporary skilled migrationprograms of Australia and Canada),
whileunskilled migrants often must rely on bilateralor regional
agreements, such as the seasonalwork programs between Germany and
coun-tries in central and eastern Europe.
Temporary migration may facilitategreater migration flowsWhile
temporary migration programs can gen-erate benefits similar to
those of permanent mi-gration (such as higher incomes for
migrants,improved efficiency in destination countries,remittances
for origin countries), in some re-spects those benefits differ
between permanentand temporary migration. For the legal mi-grant,
being admitted on a temporary basismay be less desirable than
permanentresidence, which provides for free movementbetween
destination and origin countries.However, the existence of
temporary migrationprograms (reflecting resistance to
permanentmigration) may facilitate larger legal flows.
From the point of view of the destinationcountry, temporary
migration offers the flexi-bility to target required skills and to
adjustentry in response to changes in labor demand.Temporary
migration can reduce fiscal pres-sures that may be associated with
low-skilledimmigration, in that temporary migrants tendnot to bring
their dependents (who may re-quire public services). At the same
time, pro-grams can be made conditional on employ-ment, thereby
limiting social tensions fromimmigration. Provisions for temporary
migra-tion also can be viewed as offering an alterna-tive to
irregular migration.
The record of destination governments inensuring that temporary
migration programsare indeed temporary has been mixed. Forexample,
over 22 years, most workers in theMexico–U.S. guest workers program
returnedat the end of their seasonal jobs, although somefound ways
to obtain permanent status (Martin2003). Similarly, from 1960 to
1973, three-quarters of the 18.5 million foreigners whocame to work
in Germany left. But 25 percentremained. Coupled with rules that
allowedmany to eventually bring their dependents, thisresulted in
significant permanent settlement.There is some evidence that the
recent guestworker programs in Europe, particularly thoseinvolving
subcontracting for short-term pro-jects and some return incentives,
have managedhigher return rates (Lucas 2004a).
G L O B A L E C O N O M I C P R O S P E C T S 2 0 0 6
72
Thousands
Note: Double counting occurs if a person enters the UnitedStates
more than once during the year.a. Reflects the number of admissions
under H-1B visas,not the number of persons.
Source: United Nations.
Figure 3.6 Number of temporary workersadmitted under skill-based
programs
0
200
600
400
1992
Australia
Canada
United Statesa
France
United Kingdom
2000
100
500
300
-
There are advantages and disadvantagesto temporary
migrationReliance on repeated, temporary migrationfor workers also
has some economic draw-backs. Hiring a temporary immigrant maymean
a shorter duration of employment com-pared with hiring a permanent
immigrant, andthus higher costs for training. Temporary mi-grants
are also less likely than permanent onesto invest in skills
specific to the destinationcountry (such as language proficiency
andlicensing requirements), because the returnsare enjoyed over a
shorter period of time(Chiswick 2000). Nevertheless, for
emigrantsfrom developing countries, the wage differen-tials are so
large that they may justify sub-stantial investments in acquiring
such skills,even for temporary stays.
For the origin country, remittances (andrepatriation of assets)
may be higher withtemporary migration, because temporary mi-grants
are less likely to bring their dependentsand more likely to
maintain close ties withthe home country. Perhaps most
importantly,temporary migration programs can provide anopening to
increase legal, unskilled migration,which generates the greatest
developmentalimpact for origin countries, as already noted.On the
other hand, temporary migration mayprovide a less reliable means of
exportinglarge labor surpluses, as cancellation of futureaccess is
easier for destination countries thanexpelling existing migrants.
However, it is thisflexibility (coupled with less long-run
popula-tion pressure, fewer concerns over integration,and fewer
pension commitments) that makestemporary migration desirable for
destinationcountries, thus facilitating agreements forlarger
unskilled migration (Winters 2005).
Bilateral agreements can play animportant role in low-skilled,
temporarymigrationBilateral labor agreements have become amajor
vehicle for low-skilled, seasonal workersin agriculture, tourism,
and construction, asevidenced by agreements between the
UnitedStates and Mexico, Germany and central and
eastern European states, and Saudi Arabia andEgypt and Libya.
There are several hundredsuch agreements worldwide, including
some168 signed in the last 50 years in Latin Americaalone, half in
the past 10 years (IOM 2005a).38
Bilateral agreements could improve the bene-fits of temporary
migration for origin countriesthrough greater certainty of access
and condi-tions. This may be particularly important inmarkets where
increased competition fromother suppliers might lead to a reduction
in ac-cess (as occurred in Saudi Arabia and the Mid-dle East in the
1990s). Bilateral agreements canhelp build the confidence in both
origin anddestination countries that a particular channelof
migration will generate real benefits andminimize costs—for
example, that migrantswill be treated well and will return at the
end oftheir contract.
Several factors impede the maximizationof gains from bilateral
agreements, however.Some origin countries may lack
sufficientlyreliable information on demand for theirworkers in
destination countries, and in whichsectors, to negotiate
appropriate agreements.Destination countries may likewise have
dif-ficulty reliably estimating labor shortages inparticular
sectors. And origin countries mayface resource constraints in
implementingobligations with regard to prescreening of mi-grants or
monitoring of their return, althoughthese may be covered by the
destinationcountry (as in a nurses program betweenRomania and
Italy). Origin countries may alsolack bargaining power to conclude
termsfavorable to them or to conclude agreementsat all. For
example, of 18 bilateral agreementsproposed by the Philippines with
countriesin Africa, Asia, Europe, and the MiddleEast, five
countries refused to enter intoagreements, and others have remained
inac-tive (Go 2004).
Nevertheless, there is scattered evidencethat countries like the
Philippines have beenable to use bilateral agreements to
gainfavorable employment conditions for theirmigrants—and in some
cases to support theirreturn and reintegration (Lucas 2004b).
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Bilateral agreements can help ensure thatorigin-country
credentials are accepted indestination countries, for example.39
They canhelp ensure that temporary migration is indeedtemporary,
and that returning migrants arereintegrated, by supporting the
transfer oftechnology and human resource developmentin the origin
country, as under Spain’s agree-ments with Colombia and Ecuador
(IOM2005a). Bilateral agreements can also ensurethat the origin
country cooperates in monitor-ing and managing migration, for
example, byincorporating a readmission provision (as in the1997
agreement between Italy and Albania).
They also can limit the effects of braindrain. For example, a
pilot scheme betweenthe Dutch and Polish ministries of
healthprepared Polish nurses for employment in theDutch health care
system for a maximumperiod of two years and to facilitate
theirsubsequent return and reintegration into thePolish health care
system.40 Other proposalstake a development-cooperation
approach,under which destination countries fund thetraining (to
their standards) of a given numberof nurses in excess of origin
country demand,with the surplus nurses granted temporaryvisas to
work in destination countries for aspecified period, with
guaranteed return.
Except in the EU, regional andinternational agreements have
hadlittle impact on migrationAt the regional level, there has been
someprogress on removing technical and adminis-trative barriers to
the cross-border exchangeof skilled personnel for business purposes
inAfrica, Europe, Latin America, and parts ofAsia. Also, several
consultative processes onmigration have emerged at the regional
andglobal levels.41 However, with the major ex-ception of the EU,
most regional arrangementshave had little impact on the free
movement ofless-skilled foreign workers or on permanentmigration
(World Bank 2005).
International treaties have had only limitedimpact on migration.
Mode 4 of the General
Agreement on Trade in Services (GATS) hasthe potential to
improve cooperation on laborservices between countries of origin
and desti-nation, but so far it has not facilitated a signif-icant
rise in cross-border labor movements(box 3.2). The ILO has
pioneered the develop-ment of international instruments for
protect-ing the rights of migrant workers, and the UNGeneral
Assembly adopted the InternationalConvention on the Protection of
the Rights ofAll Migrant Workers and Members of TheirFamilies,
which clearly defines the rights ofmigrant workers, including
irregular workers(Wickramasekera 2002). The convention en-tered
into force in 2004. However, none of themajor destination countries
have ratified it yet,and its means of enforcement are limited.
International agreements governingmigration contrast sharply
with thosefor tradeA major impulse behind the General Agree-ment on
Tariffs and Trade and its successor,the World Trade Organization,
was that mul-tilateral agreements that provide for
nondis-crimination among countries would maximizethe gains from
trade. By contrast, there is lit-tle support for multilateral,
nondiscriminatoryapproaches to migration, at least in destina-tion
countries. In part this is because theeconomic implications of
nondiscriminationdiffer between trade and migration. In
trade,nondiscrimination maximizes economic effi-ciency by allowing
the lowest-cost supplier tocompete, thus reducing prices and
forcinghigh-cost producers to improve efficiency orexit the market.
But labor markets in high-income countries are generally not
permitted(through minimum-wage laws and social-insurance schemes)
to adjust fully to thelowest-cost supplier. Thus the benefits
ofnondiscrimination are weaker in migrationthan in trade. U.S.
consumers benefit if Indianshirts are cheaper than Mexican shirts,
butU.S. employers benefit little if Indians are will-ing to work
for less than Mexicans—thedecline in wages is limited.
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The WTO General Agreement on Trade in Ser-vices (GATS) does not
cover labor migration perse, but rather the narrower concept of
movement ofpeople across borders as one of four modes of
deliv-ering services. Mode 4 covers the temporary move-ment of
persons across borders for the purpose ofsupplying a service.
“Temporary” movement is notdefined, but permanent migration is
explicitlyexcluded, as are workers in most nonservice sectors,such
as agriculture or manufacturing.
Mode 4 service suppliers can be viewed in termsof both duration
and purpose of stay: they enter acountry for a specific purpose (to
fulfill a servicecontract), for a limited and (generally) specified
pe-riod of time, and are usually confined to one sectoror one job
(they do not enter the labor market andare not free to search for
employment). Mode 4 isnormally understood to include business
visitors(persons who come for three months or less to nego-tiate a
contract), intracorporate transferees (personstransferred within a
company from one country toanother), and suppliers of contractual
services (indi-viduals or employees of foreign companies with
acontract to supply a service to a client in the receiv-ing
country). While Mode 4 includes persons at allskill levels, to date
market-opening commitments byWTO members have been limited to the
highlyskilled.
Relatively few market-opening commitments onMode 4 have been
made by both developed and de-veloping countries. Those that have
been made tendto be subject to restrictions on number, type, and
du-ration of stay of service suppliers. Countries’ actualregimes
for temporary entry of workers tend to bemore liberal than their
GATS commitments, how-ever, and considerable movement on service
issues isoccurring in a range of sectors (such as
health),notwithstanding the near-absence of relevant
GATScommitments.
Five issues arise regarding GATS Mode 4 as aninstrument to
manage labor mobility. First, GATScommitments are fixed commitments
of guaranteed
Box 3.2 Mode 4 and international migrationtreatment, while
migration regimes seek to retainflexibility to make adjustments in
line with labor-market conditions. Second, GATS commitmentsfollow
the most-favored-nation (MFN) principle—that is, treatment offered
to one country must beextended to all WTO members—whereas
migrationregimes can offer special treatment to countries withwhich
regulatory trust or other special relationshipshave been built
(through visa waiver programs, forexample). Third, GATS Mode 4
covers only a rela-tively limited subset of the workers moving
aroundthe globe. Agricultural workers, for example, are
notgenerally viewed as falling under the GATS. Fourth,multilateral
trade negotiations have a 50-year history,while migration has
largely remained a national pol-icy prerogative characterized by
limited internationaldialogue. Finally, movement of people,
especially thelower-skilled, raises a raft of issues related to
socialand cultural integration, exploitation, impact onlocal labor
markets, and, more recently, security thattrade agreements are
ill-equipped to address.
Against this background, what role might theGATS play in
managing labor mobility? The GATSis a narrow, but sharp, instrument
that can deliver apowerful guarantee of access, but only for
certaintypes of workers. Beyond this, however, GATS nego-tiations
can be used to create a sense of urgency thatmay serve to bring
migration authorities to the tableto discuss ways to manage
mobility. Bilateral or re-gional approaches could, for example,
include low-skilled workers and develop creative, cooperative
ap-proaches to issues such as remittance transfer, braindrain, and
loss of investment in education, prescreen-ing of temporary
workers, and return. These agree-ments could assist in building
regulatory trust andimproving management schemes in receiving
andsending countries. Over time, by creating a templateof basic
requirements or criteria that could be ap-plied to all countries on
a nondiscriminatory basis,they could be used to extend access to a
wider groupof countries and so approach the MFN principle
ofGATS.
-
But the largest reason that nondiscrimina-tory approaches are
limited is that people arenot goods: migration has much broader
impli-cations for society than does trade. Destina-tion countries
tend to be concerned thatimmigrants from countries with very
differentcultures will not integrate easily into society,and
high-income countries tend to limit low-income migrants for fear of
overburdeningpublic services (see chapter 2). Thus eventhose
countries that have immigration regimesthat do not discriminate by
country tend todiscriminate by level of skill.
A final important distinction between tradeand migration is that
trade is subject torelatively effective regulation, while
manycountries of destination face considerabledifficulties (and
internal disagreements) in reg-ulating immigration. The lack of
effectiveregulation and incomplete efforts to controlimmigration
encourages many low-skilled mi-grants to run substantial risks that
can lead toconditions akin to slavery, great physical dan-ger, and
even death. On the other hand, thesame lack of control works to the
advantage ofmigrants by offering opportunities that mightnot
otherwise exist and by benefiting groupswithin destination
countries. The evidence inthis chapter suggests that cooperation
betweenorigin and destination countries, throughagreements that
provide for temporary, low-skilled migration, and through
enforcement oflaws protecting migrants from exploitationand abuse,
can improve the impact of migra-tion for countries and for
migrants.
Notes1. Of course, migration may arise out of a combi-
nation of economic, political, and social goals. Also,migration
among developing countries is an increas-ingly important
phenomenon, but given data limita-tions we focus here on migration
from developing toindustrial countries.
2. Empirical work largely confirms the view thatincome
differentials are important determinants ofmigration. Borjas
(1987), Karemera, Oguledo, andDavis (2000), and Hatton and
Williamson (2002)found that migration to the United States was
nega-tively related to source-country income per capita,
among other variables. Solimano (2002) found thatreal per capita
income differentials between Argentinaand source countries were the
main determinant of netmigration flows in the twentieth
century.
3. See also chapter 2, which points out thatmigrants’ earnings
(per worker) increase eleven-fold,before adjusting for differences
in purchasing powerin high-income versus developing countries.
4. The basic idea is that the opportunity to earnmoney based on
developed country prices but spend it(through remittances) based on
developing countryprices is a major benefit from migration. The
sameadjustment from the perspective of the migrant isdiscussed in
the modeling exercise in chapter 2.
5. See the discussion of remittances and smoothingof household
consumption in chapter 5.
6. By the late 1990s, public employment servicesalready played
an insignificant role in the recruitmentof foreign workers, except
where migration wascovered by bilateral labor agreements (ILO
1997). Forexample, nine out of ten workers sent from Asiahave used
private recruiters (Abella 1997); and forRomania, most jobs in
countries with which the gov-ernment has not secured bilateral
agreements are foundby private intermediaries (Diminescu 2004).
7. Hugo (2004) describes how work contractorsare the primary
source of information for potentialmigrants from Indonesia, and
relates this to the highlevels of exploitation of Indonesian
contract workerscompared with workers from other countries.
8. Support services provided through Philippinelabor attachés
have provided critical legal counselingand protection
(Moreno-Fontes Chammartin 2005).
9. The funds operated by the Philippines, Pakistanand Sri Lanka
provide scholarships, legal aid indestination countries, insurance
against death anddisability, and loans for predeparture costs,
housing,and self-employment. The administration and deliverycan
often be difficult, particularly on insurance (Tan2004), and some
emigrants may resent the mandatorynature of the schemes (Abella
1997).
10. Also regarding Mexico, Mora and Taylor(2005) find that the
presence of a family member in theUnited States increases by 7
percent the probabilitythat an individual will migrate, while
McKenzie (2005)shows that larger migration networks increase
theprobability of other community members migrating.
11. An irregular migrant in this context is definedas any person
entering, residing, and working in a coun-try without proper
documentation of their legal statusin that country, or any person
who has committed acrime or breach of immigration law in that
country andtherefore is not entitled to remain in that country.
12. However, Cornelius (2001) notes that the shareof irregular
migrants who settle permanently in the
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United States has increased—a trend accelerated bytighter border
enforcement adopted in the mid-1990s.
13. Protocol to Prevent, Suppress and Punish Traf-ficking in
Persons, Especially Women and Children;and Protocol against the
Smuggling of Migrants byLand, Sea and Air, 2000. These supplement
the Con-vention against Transnational Crime, 2000.
14. Dedicated government offices such as thePhilippines Overseas
Workers Administration, unionssuch as the seamen’s union in the
Philippines, and non-governmental organizations (NGOs) can help
familiesand communities make adjustments when family mem-bers
migrate.
15. These data are described in Docquier andMarfouk (2004),
which relies on census data (plusextensive estimations), and thus
undercounts irregularmigrants, who are mostly low skilled. The data
aretaken largely from industrial countries, so that low-skilled
migration to other developing countries, as wellas high-income
countries in the Middle East and Asia,is not reflected (which, for
example, reduces the ratioof low-skilled emigrants from South
Asia).
16. Similarly, mine labor recruiting in South Africaincreased
wages in the plantation sectors in bothMalawi and Mozambique, which
ultimately resulted inthe curtailed permission to recruit in Malawi
in theearly 1970s (Lucas 1987).
17. For example, the compulsory repatriation ofworkers to Kerala
following the Gulf conflict in1990–91 threw Kerala into a fairly
sharp recession(Lucas 2004b).
18. This is not invariably true, for example, if thedeparture of
one household member leaves his or herdependents impoverished. In
general, family income islikely to rise with emigration, but cases
of real hardshipcaused by emigration do exist.
19. This calculation is based on income that in-cludes
remittances from the emigrant, so the number ofSri Lankan
households with a family member abroadthat were poor prior to
migration is probably larger.
20. Much of the data on high-skilled migrationrefers to
individuals who have some tertiary education,although other kinds
of qualifications (electrician,plumber, ability to handle
sophisticated machinery) areof economic interest.
21. See Lowell (2001) for a list of programs toattract
high-skilled workers.
22. For example, forgone income tax revenuesassociated with
Indian-born residents of the UnitedStates may be equal to one-third
of current individualincome tax receipts in India (Desai, Kapur,
andMcHale 2001), although this is a very low share oftotal
government revenues.
23. Such countries benefit highly from remittances.Remittances
to countries with populations of less than
1.5 million totaled about 6 percent of gross nationalincome,
compared with an average of 1.7 percent forall developing
countries.
24. Available data do not distinguish émigréseducated at home
from those educated abroad, an issueof growing importance as
education is increasinglymarketed to the developing world by
high-incomecountries.
25. This theory is developed in Mountford (1997),Chau and Stark
(1999), Stark (2003), and Drinkwaterand others (2002).
26. These data do not include high-skilled emi-grants to other
developing countries, which may be animportant issue for many
developing countries.
27. Microeconomic evidence tends to find thateducation is
associated with higher earnings (Mincer1991). After some
considerable debate, recent articlesfind that years of schooling
have a positive impact onproductivity growth (de la Fuente and
Domenech2002), and that the quality of education (as measured,for
example, by pupil-student ratios or the dropoutrate) may matter
more than the quantity (Barro andLee 2000).
28. Clemens (2005) presents an alternative view,arguing that
health systems in Africa are not greatlyweakened by emigration
because the option to emi-grate encourages entry into the medical
field.
29. Institutions exist in countries of origin thattrain workers
for external labor markets, for examplesome nursing schools in the
Philippines and a medicalschool in Budapest that teaches in German.
However,these schools do not receive funds from potential
coun-tries of destination (World Bank 2004).
30. Data are based on a survey carried out for abackground
paper, available on request.
31. Workers who stayed in Albania had higher-quality skills than
returnees (De Coulon and Piracha2002), and returnees from Sweden
were found to beless successful economically than emigrants who
stayed(Edin, LaLonde, and Åslund 2000). See also Hugo(2002) on
re-emigration from Australia and Constantand Massey (2003) on
Germany.
32. See Pang, Lansing, and Haines 2002 onThailand, Lucas (2004a)
on China, and the IOM officein Tunis on Tunisia.
33. The High-Level Committee on the IndianDiaspora (2001) notes
the role of expatriates in at-tracting R&D investments from
Intel, Oracle, TexasInstruments, Sun Microsystems, and IBM.
34. Recognizing benefits earned abroad mayreduce costs to the
destination-country government, asmany such services are likely to
be less expensive in de-veloping countries. The cost implications
have someuncertainty, as some migrants will choose to returneven
without portability of benefits.
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35. For example, a program between Germany andEritrea disbursed
only 65 loans from 1993 to 1997,while a project in Italy’s Veneto
region trained only 30Albanian immigrants in setting up companies
orlaunching joint ventures with local companies in theircountry of
origin.
36. The Return of Qualified Africans program wasevaluated by the
European Commission as contribut-ing to development at micro levels
(IOM 2005b).
37. The Return for Qualified Afghans has beencriticized for
offering low compensation packages andinvolving few individuals
despite being expensive torun (Jazayery 2002).
38. Australia, Argentina, Canada, and the UnitedStates entered
into bilateral labor agreements withcountries of origin in the
mid-twentieth century. Thebracero program admitted some five
million Mexicanfarm workers to the United States between 1942
and1966. In Europe, Germany and France recruited guestworkers from
southern Europe, Turkey, and NorthAfrica after the Second World War
until the economicdownturn of the 1970s.
39. An example is the agreement that provides forthe acceptance
of Vietnamese information technologycredentials in Japan (Vietnam
Trade 2005).
40. The pilot ended in January 2005, and the out-comes are being
evaluated by the Dutch government.
41. Regional examples include the Regional Con-ference on
Migration (Puebla Process) and Lima Processin the Americas; MIDSA
and MIDWA in Africa; and theManila, APC, and Bali Processes in
Asia. Inter-regionalprocesses include the “5 plus 5” (a migration
dialogueestablished in 2002 between southern Europe—France,Italy,
Malta, Portugal, Spain—and the Maghrebgroup—Algeria, Libya,
Mauritania, Morocco, andTunisia. Global consultation forums include
the UNGlobal Commission on International Migration, theBerne
Initiative, IOM’s International Dialogue on Mi-gration, and ILO’s
International Labor Conference.
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