1 Effects Of Migration On Sending Countries: What Do We Know And What Can We Do? 10 January 2006 Louka T. Katseli, Robert E.B Lucas and Theodora Xenogiani

2 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

3 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)

4 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 which Morocco: 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 of Kenya: 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 which Iran: 0.7% Iraq: 0.5% Lebanon: 0.3% Data Source: OECD Database on Expatriates and Immigrants, 2004 (Census Data )

5 Adult migrants in OECD Europe and N. America by education level and origin (2000) Data Source: OECD Database on Expatriates and Immigrants, 2004

6 Low education adult migrants In EU-15 by region of origin (2000) Data Source: OECD Database on Expatriates and Immigrants, 2004

7 Low-skilled migration rate to EU-15 against income level of country (2000) Data Source: OECD Database on Expatriates and Immigrants, 2004

8 Number of Tertiary Educated Migrants In OECD Countries: 1990 and 2000 Data source: Docquier and Marfouk (2005)

9 Percent of Tertiary Educated Population in OECD Countries (2000) Data Source: OECD Database on Expatriates and Immigrants, 2004

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

11 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 skilledUnskilled Dummy=l if common offical language in the 2 countries (0.304)**(0.362)** Dummy =l if colonial relationship after (0.821)** (0.977)** Dummy=l if the two countries are contiguous (0.395)** (0.457)** Distance in km between the two countries (0.064)**(0.078)** Voice and Accountability (0.082)**(0.101)** Unemployment Rate (sending country) (0.089)**(0.111)** Unemployment Rate (receiving country) (0.152)**(0.187)** No. of Observations R

12 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

13 Diagrammatic Exposition of Transmission Channels Migration- related shocks Lab. SS Δ <0 Remit. Flows >0 Lab. SS Δ >0 Structural Characteri stics Migrants Characterist ics 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

14 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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16 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

17 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

18 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)

19 Remittances: Who benefits? Reported Remittances Sent per Migrant (2000) Source: IMF Balance of Payments Statistics and UN Trends in Migrant Stock

20 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”

21 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

22 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

23 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 migrants  Strengthen incentives for circular and repetitive migration  Consider multiple policy regimes

24 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 agendas  Promote structured dialogue  Enhance partnerships

25 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

26 Thank you !