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Effects Of Migration On Sending Countries: What Do We Know And What Can We Do?

10 January 2006

Louka T. Katseli, Robert E.B Lucasand Theodora Xenogiani

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1. Towards a coherent EU migration-development agenda

Policy Concerns:

Better management of migration flows

Improving migrants’ integration (first and second generation)

Addressing risks and illegality

Policy Coherence: migration, development, security agendas interrelated

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Relevance of Evaluative Report on Sending Countries:

Better EU migration policies More effective management of EU human

resources Coherence across EU policies Better EU Development cooperation policies Design of differentiated migration-related

policy regimes Partnerships (EU, source and transit

countries)

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2. Where do EU migrants come from?

Latin America, 4.4%of which

Ecuador: 0.7%Colombia: 0.7%Suriname: 0.6%Brazil: 0.6%Argentina: 0.5% Jamaica: 0.4%Venezuela: 0.4%Peru: 0.3%Chile: 0.2%

Europe

Africa, 13.6% of whichMorocco: 4.5% Nigeria: 0.4% Algeria: 3.9% Senegal: 0.4% Tunisia: 1.3% Somalia: 0.3%Angola: 0.6% Ghana: 0.3%South Africa: 0.6% Dem. Republic ofKenya: 0.4% Congo: 0.3%Egypt: 0.4% Mozambique: 0.2%

Wider Europe 16.4%, of which

Turkey: 5.8% Croatia: 1.0%Serbia-Montenegro: 2.2% Russia: 0.7%Albania: 1.7% Bulgaria: 0.3%Romania: 1.6% Lithuania: 0.3%Ukraine: 1.4% Belarus: 0.3%Bi-H: 1.1%

Asia, 7.0%, of which

India: 1.8%Pakistan: 1.2%Vietnam: 0.8%China: 0.7%Indonesia: 0.6%Bangladesh: 0.5%Philippines: 0.5%Sri Lanka: 0.4%Hong Kong: 0.3%Japan: 0.2%

Middle East, 1.5%of whichIran: 0.7%Iraq: 0.5%Lebanon: 0.3%

Data Source: OECD Database on Expatriates and Immigrants, 2004 (Census Data 1999-2003)

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Adult migrants in OECD Europe and N. Americaby education level and origin (2000)

Data Source: OECD Database on Expatriates and Immigrants, 2004

Low

MiddleHigh

Low MiddleHigh

Europe America0

5

10

15

Mill

ion

s

Non-OECD

OECD origin

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Low education adult migrants In EU-15 by region of origin (2000)

W Europe

Americas

E EuropeFormer Soviet

S Asia

E Asia

W Asia

N Africa

SS Africa

Data Source: OECD Database on Expatriates and Immigrants, 2004

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Low-skilled migration rate to EU-15 against income level of country (2000)

Data Source: OECD Database on Expatriates and Immigrants, 2004

6 7 8 9 10 11

Log GDP per capita 2000

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

Lo

g lo

w s

kill

em

igra

tio

n r

ate

to

EU

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Number of Tertiary Educated Migrants In OECD Countries: 1990 and 2000

Data source: Docquier and Marfouk (2005)

Americas EU15 Other OECD0

5

10

15

Mill

ions

1990

2000

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Percent of Tertiary Educated Population in OECD Countries (2000)

<2%<5%<10%<20%>20%

Data Source: OECD Database on Expatriates and Immigrants, 2004

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Distribution of tertiary educated population from Easter Europe in OECD: 2000

RussiaLatvia

MoldovaUkraine

HungaryPoland

RomaniaBelarusCroatia

Czech RepublicLithuania

AlbaniaSlovenia

EstoniaBosnia and Herzegovi

BulgariaSlovakia

Serbia and MontenegrMacedonia

0 20 40 60 80 100

Percent

Other EuropeEU15 N America

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Geographic proximity, cultural and colonial ties matter

Dependent Variable: log (Number of people born in country i, living in country j/total population of country i)

Highly skilled UnskilledDummy=l if common offical language in the 2 countries 3.002 2.700

(0.304)** (0.362)**

Dummy =l if colonial relationship after 1945 2.129 3.400 (0.821)** (0.977)**

Dummy=l if the two countries are contiguous 1.410 2.829 (0.395)** (0.457)**

Distance in km between the two countries -0.936 -1.029(0.064)** (0.078)**

Voice and Accountability 0.374 0.457(0.082)** (0.101)**

Unemployment Rate (sending country) 0.350 0.363 (0.089)** (0.111)**Unemployment Rate (receiving country) -0.662 -0.805

(0.152)** (0.187)**

No. of Observations 663 616R2 0.6271 0.6153

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3. Migration-Development Interlinkages

Channels:

Shocks: changes in labour supply, productivity, remittances

Endogenous behavioural processes

Policy responses

Effects on growth and poverty reduction – through labour resource availability, human-capital accumulation and productivity – contingent on both time and place

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Diagrammatic Exposition of Transmission Channels

Migration- related shocks

Lab. SS Δ <0

Remit.Flows >0

Lab. SS Δ >0

StructuralCharacteristics

Migrants Characteristics

Skill Comp/n

Labour Market conditions

Credit market conditions

Behavioral and Policy Responses

Length of Stay

Labour market Response

Human Capital Response

Techn. Progress

Investment

Econ.Restructuring

Prod/vity

Outcome Effects

Growth

Poverty

Distribution of income and wealth

Social Effects

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The migration cycle: a stage-based experience

Time-varying framework explains: heterogeneity of growth outcomes differences between short run and long run impacts

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R Y/N LY

Growth= labour supply changes+ productivity effects + transfer effects

Labour: L

Productivity:

NY /

Transfers: R

Growth: Y

Poverty

Inequality

Exit Stage <0 <0 0 ?0

>0 >0

Adjustment Stage

?0 ? ?0 ?0

?0 ?0

Consolidation Stage

?0

>0 >0 >0

<0 <0

Networking Stage

=0 >0 ?0 >0

<0 <0?

Repatriation/ Immigration/ Circulation Stage

>0 ? <0 ? ? >0?

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Effects on sending countries from unskilled labour departure

Without surplus labour: Employment and income gains to low skilled natives Output declines Long run restructuring

With surplus labour: Employment and income gains to low skilled natives Small/no effect on output

In both cases: Strong regional effects Ripple effects depend on domestic labour market

integration/internal migration Positive impact on poverty

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Brain drain: is this a loss? Spillover benefits

potential tax revenue

Invested fiscal revenues for education/training

Delivery of key social services

Depends on:

Nature of constraint in social service delivery system

Utilisation of skilled personnel

Replacement options

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Brain gain: is this feasible?

Induced education: mixed evidence (Philippines, Mexico)

Trade with home country Technology transfer Return of highly skilled migrants (Vietnam, Albania,

Bangladesh, Philippines). But:– Return rates often low (mixed evidence)– Skill mismatches– Deployment of new skills low

Business establishment (Egypt, Albania)

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Remittances: Who benefits?

Reported Remittances Sent per Migrant (2000)

Source: IMF Balance of Payments Statistics and UN Trends in Migrant Stock

0

500

1000

1500

2000

2500

3000

US

$

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The impact of remittances

Income distribution effects mixed Poverty reduction (e.g. Malawi, Botswana, Lesotho,

Mozambique, Mexico, Greece) Insurance against risk (e.g. Senegal, Mali) Additional education (El Salvador) Multiplier effects quite large (Mexico and other LDCs) Small deterioration of price competitiveness (real

exchange appreciation) Balance of payments effects: “transfer economies”

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Social effects of migration

Children’s education: opposite effects linked to higher household income but absent parents (Mexico, Philippines)

Children’s health: positive impact (Mexico and Philippines)

Family roles

Women’s role

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4. Trade- migration- investment interlinkages

Migration and trade are complements in the short and medium run

Migration increases trade through:• Preferences• Access to information• Trade intermediation• Participation in business networks

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5. Challenges for EU policy making

Strategic management of EU’s human resources needed: Interlinkages between domestic, demographic and

labour market management and migration flows Improve Europe’s attractiveness as destination for

highly skilled migrantsStrengthen incentives for circular and repetitive

migrationConsider multiple policy regimes

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Need for greater EU policy coherence:Promote more coherent migration and

development cooperation policies: ODA is an integral component of migration management

Link migration and human-security agendasPromote structured dialogueEnhance partnerships

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Increase net gains from migration: Improve capacity-building in sending countries Mitigate depletion of critical skilled human resources,

esp. in Africa Lower the costs of remitting Deepen market integration via investment and

circular migration flows Consider more equitable cost-sharing schemes

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Thank you !