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Consolidating labour markets

In reducing the negative effect of the lost-labour effect, the first priority is the consolidation of labour markets. In this respect migrant-sending countries play an important role. They can, in particular, put in place policies that aim to reduce the negative impact associated with South-South flows (where generally the negative lost-labour effect dominates the positive remittance effect) while leveraging the positive impact of South-North flows (since the positive remittance effect dominates the negative lost-labour effect). Policy makers are nevertheless constrained since migration policies, especially those that concern migration to OECD countries, are out of their control.

The negative aspect of lost labour is essentially due to the absence of a working labour market, as households cannot adequately compensate for the departure of productive members. It is therefore important that sending countries adopt measures integrating labour markets, locally and nationally. This implies, in particular, a gradual move towards more formal economic activity. The creation of national job centres, for instance, is an effective way of consolidating labour markets while also contributing to the reduction of the lost-labour effect.


Figure 5.4. Labour mobility and development: priorities

Tackling the Policy Challenges of Migration © OECD 2011

Migrant-receiving countries are also well positioned to implement migration policies that leverage the positive impact of labour mobility for development. As explained previously, adding flexibility in migration schemes would reinforce the link between migration and development with the added benefit of not affecting the objectives of migration control. In this respect circular programmes help countries benefit from migration by minimising the lost-labour effect, particularly in the agricultural sector. For the home country, circular migration preserves the continuity of agricultural activities throughout the year, especially when agricultural cycles in the home and receiving countries happen at different times of the year. The opportunity to return each season constitutes an additional factor of income stability for migrants; the steady source of income allows them to invest in their home country.

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