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Emigration, labour markets and development

Migration is a major factor in development and economic convergence. It can produce substantial consequent changes in labour markets at home and in social conditions, including wage levels, household welfare, food security, child welfare and the role of women as workers and carers. Migrants' remittances can also have impacts on work, productivity and education. The level of remittances appears to be closely related to economic conditions in host countries. It is not only the households of migrants, male or female, that are affected: there are impacts on those not sending migrants. Migration seems to have a positive effect on income, production and spending on education. The relationship between "lost labour" and remittances is one that merits further study.

Chapter 2 concluded that over the last 20 years immigration has become a key and contentious topic in most industrialised countries. The financial crisis, the Arab Spring and widespread famine in East Africa have combined to reinforce this phenomenon and have highlighted the trend of retreating from the idea of more open borders. A core reason for this is tied to the perceived impact of immigration on wages and unemployment and that is, without a doubt, at the heart of academic and political debate. Some researchers argue that it contributes to an increase in unemployment and exercises downward pressure on real wages (for instance Chiswick, 2009), a fact that is vigorously disputed by others (for instance Card, 2009).

But migration has a mirror effect: it helps alleviate poverty in the migrant's home country. In this respect, more recent political consideration has been given to migration as a possible channel of development. Most studies in this branch focus on the effects of remittances on development (OECD, 2007). But the impact of labour mobility goes far beyond remittances and even migrant households. It affects employment and job opportunities in the countries of origin and produces spillovers, or chain reaction, on other households and communities.

The increasing connection between countries and the growing reliance worldwide on migration as a vector for all types of capital mean that labour markets are at the very heart of the issue. Even though these aspects have not attracted the same level of political interest, the labour market remains arguably one of the most important facets of poverty reduction. In fact, since households from poor and middle-income countries rely heavily on income derived from employment, a change in the availability of labour or jobs implies a direct change in their welfare.

This chapter focuses on the economic development of the home country by looking at changes in the labour market induced by emigration. It presents results from three OECD working papers. On one side, Gagnon (2011) shows that the intense period of emigration from Honduras following Hurricane Mitch in 1998 increased wages, particularly those of high-skilled workers, women, rural workers and workers in the private sector. On the other, Filipski and Taylor (2011) and Wouterse (2011) add contributions by simulating policy changes in host immigration countries and observing their impact on household welfare in the home country. The first case study focuses on Mexico and Nicaragua; the second on Burkina Faso.

The chapter adds its own contribution by summarising the literature on emigration and the labour market in a coherent manner for policy making. It argues that the trade-off in the household between labour lost to emigration and increasing income from remittances implies changes in labour supply for the household members staying behind. In the aggregate, the positive impact of emigration on wages in the home country is an important dimension of development and economic convergence between poorer and richer countries. Moreover, South-North migration has a bigger impact on the welfare of source countries than South-South migration. Finally, immigration policies in the home country impact on welfare and poverty in the host country, beyond migrant households.

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