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Migration: another piece in the jobs puzzle

29 November 2012


Author Bio

Paula Lucci is a Research Fellow in the Growth, Poverty and Inequality Programme at ODI.

Creating and sustaining good quality jobs is often seen as a country-specific challenge. But as the World Bank’s World Development Report acknowledges, the fact that a large number of people decide to move countries in search of better work opportunities, implies that there is a global dimension to the jobs challenge that cannot be ignored.

It is estimated that in 2010, there were 214 million international migrants, almost half of which were economically-active workers. Some countries host a large number of migrants (that is, they are mainly ‘destination countries’), others experience relatively high levels of emigration (also referred to as ‘source countries’), while others do not exhibit either characteristic strongly. For example, the United States, Russia and Germany (in that order) have the largest numbers of foreign-born populations, while others, like Bangladesh, India and Mexico, see high numbers emigrate.

In some cases, particularly for smaller countries, the proportion of the population either living overseas or that is foreign-born can be very large. In El Salvador, about a fifth of the population live abroad, while in Kuwait, Qatar and the United Arab Emirates more than 60% of the population is foreign-born. And rather than the permanent and unidirectional flows observed in the past, recurring movements between source and destination countries – often referred to as ‘circular migration’ – are becoming increasingly common.

Large differentials between wages in different countries – most sizeable between the South and North, but also between some economies in the South – provide a rationale for labour migration. The prospect of higher incomes, plus the capacity to send money back home, means migration has the potential to improve the living standards of migrants and their families. Migrants can also contribute to global output if their productivity abroad is higher than it was at home. And in some cases, networks of migrants and returnees can have further impacts on their home countries if they decide to channel investment and their improved skills to this end.

However, there are also a number of concerns associated with migration that help explain why, despite its potential, it remains restricted in practice. Workers in destination countries often fear increasing competition in the labour market, although most studies find no (or very small) negative effects on the earnings of local workers. There are also concerns related to social cohesion, national security, and public-services capacity. In source countries, it is ‘brain drain’, particularly of the most skilled workers, that preoccupies politicians – although again, the empirical evidence on this is mixed.

As a consequence of the political sensitivities that surround it, migration is rarely seen as a development issue. Yet in some contexts it has the potential to reduce poverty and enhance human development in source countries while also addressing labour shortages in destination countries. If we add to the mix the demographic pressures that some developed and emerging economies are likely to suffer in the future as a result of an ageing population, and couple that with an abundance of labour in some developing economies, there is a real opportunity for mutual benefits.

There is no doubt that the jobs challenge that many developing economies are facing requires active growth and labour-market policies that take seriously the quality of jobs being created. But the challenge does not end at home. The movement of people connects and affects different labour markets.

Bilateral, or in some cases regional, agreements  – based on the complementary needs and characteristics of labour markets in source and destination economies – could lead to better outcomes for all affected parties. The case becomes even more compelling when taking future demographic pressures into consideration. In some contexts, matching people and jobs beyond boundaries can be a complement to other policies that seek to create and sustain good quality jobs.

It is time we consider migration as another piece in the jobs puzzle.