1. Immigration, Development and Policy Trade-Offs Jeff Dayton-Johnson and Theodora Xenogiani OECD Development Centre 4 th Annual AFD/EUDN Conference 8 November 2006, Paris

2. 2 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

3. 3 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

4. 4 What objectives might be affected by migration policies?  Balancing supply and demand in domestic labour markets (high skill, low skill...)  Promoting social cohesion  Reducing international poverty

5. 5 What policy instruments are deployed to achieve those objectives?  Migration policies visas, agreements, amnesties, border controls…  Social policies social insurance, social assistance, equality of opportunities…  Development co-operation policy foreign aid, technical assistance…

6. 6 Objective I: Labour Market Equilibrium Policy Instrument I (Migration Policies) Policy Instrument 3 : (Development Assistance) Interaction of Policies Objective III: International Poverty Reduction Objective II: Social Cohesion Policy Instrument 2 : (Social Policies)

7. 7 Policy Instrument I (Migration Policies) Policy Instrument 3 : (Development Assistance) Interaction of Policies Policy Objective X Policy Instrument 2 : (Social Policies)

8. 8 Objective I: Labour Market Equilibrium Policy Instrument X Interaction of Policies Objective III: International Poverty Reduction Objective II: Social Cohesion

9. 9 Instruments and objectives: coherence and complementarities POLICY OBJECTIVES Balancing supply and demand in domestic labour markets Promoting social cohesion Reducing Global Poverty Low skillHigh skill POLICY INSTRUMENTS Migration policiesCan reduce (imperfectly) inflows of low- skilled immigrants Can encourage inflows of skilled service workers Can impose costs on sector such education, health Can affect labour markets in LDCs; recruitment of skilled leads to brain drain from poor countries Social policiesReduce adjustment and absorption costs; could increase inflows (“welfare magnets”) Can increase demand for immigrant social sector workers Enhance social cohesion Development co- operation policies Can better diffuse the benefits of low-skilled migration; can ease “push” factors for emigration Can perversely (?) increase the supply of needed workers (brain drain of health and education workers) ?Reduce global poverty

10. 10 Instruments and objectives: coherence and complementarities POLICY OBJECTIVES Balancing supply and demand in domestic labour markets Promoting social cohesion Reducing Global Poverty Low skillHigh skill POLICY INSTRUMENTS Migration policiesCan reduce (imperfectly) inflows of low- skilled immigrants Can encourage inflows of skilled service workers Can impose costs on sector such education, health Can affect labour markets in LDCs; recruitment of skilled leads to brain drain from poor countries Social policiesReduce adjustment and absorption costs; could increase inflows (“welfare magnets”) Can increase demand for immigrant social sector workers Enhance social cohesion Development co- operation policies Can better diffuse the benefits of low-skilled migration; can ease “push” factors for emigration Can perversely (?) increase the supply of needed workers (brain drain of health and education workers) ?Reduce global poverty

11. 11 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

12. 12 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

13. 13 Reducing global poverty: do OECD country migration policies play a role?  Low-skilled: emigration raises wages and/or reduces search costs for those left behind  High-skilled: emigration has neutral to very negative effects on service provision  Remittances: reduce poverty, raise investment (physical and human capital), may have Dutch- disease effects  Circularity: more choice may reduce the costs of brain drain, increase remittance flows

14. 14 If poverty reduction were the objective of OECD country migration policies…  Focus on low skilled mobility: their poverty- reduction impact is greater  Encourage circular movement: may reduce brain drain costs, increase remittance flows  Recruit from lower-income countries

15. 15 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

16. 16 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

17. 17 Balancing supply and demand in domestic labour markets: what are the effects of migration?  Wages: tiny negative-to-zero effect, with considerable variation  Employment: displacement vs. job-creation effects  Complementarity of immigrants and native workers  Labour-market efficiency enhancements

18. 18 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

19. 19 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

20. 20 Promoting social cohesion  Social vs. economic integration: the latter powerfully affects the former  Costs of social integration policies certainly raised by higher rates of immigration  “Full integration” or “permanent settlement” – breaking links with migrants’ countries of origin?

21. 21 What are the trade-offs?  Developing countries gain from low-skilled emigration; raises insecurity of the native low- skilled  High-skilled workers’ movement benefits OECD countries; imposes a brain drain on their home countries  Social integration is costly  How to reconcile “full integration” with “trans- nationality”?

22. 22 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

23. 23 Reducing global povertyII Balancing supply and demand in domestic labour markets III Promoting social cohesionIV VMobilising diaspora networks: a new lever? Interaction of policiesI

24. 24 What are diaspora networks?  Formal institutions (e.g. “Home Town Associations”)  Informal institutions (social and entrepreneurial networks)  Meaningfully engaged in OECD countries and in countries of origin

25. 25 What do diaspora networks offer?  Information sharing: job opportunities, accessing social services  Asymmetric information: social assistance, credit, insurance  Means of contract enforcement

26. 26 What are the limits of diaspora networks?  Networks or family contacts?  Bridging or bonding social capital?  How to “engage” informal networks?

27. 27 How can diaspora networks mitigate policy trade-offs?  increase contribution of low-skilled migration to labour-market efficiency  reduce the cost of brain drain to developing countries  reduce the cost of social integration  engender a culture of “double nationality” Diaspora networks can …

28. 28 Concluding remarks  There are genuine trade-offs, and difficult choices  Diaspora networks – like foreign aid – can help reduce, if not eliminate, these tensions  Change attitudes toward “full integration”?  For coherent migration policy – as for coherent development co-operation policy – an optimal mix of policies is needed

29. 29 Contact: Jeff Dayton-Johnson jeff.dayton-johnson@oecd.org Theodora Xenogiani theodora.xenogiani@oecd.org OECD Development Centre www.oecd.org/dev

30. 30 Merci de votre attention ! Thank you for your attention!