Global migration has lifted millions out of poverty and boosted economic growth, a new World Bank report finds. But destination countries risk losing out in the global competition for talent and leaving large gaps in their labor markets by failing to implement policies that address labor market forces and manage short-run economic tensions.
Large and persistent differences in wages across the globe are the main drivers of economic migration from low- to high-income countries, according to Moving for Prosperity: Global Migration and Labor Markets. Migrants often triple their wages after moving to a new country, helping millions of migrants and their relatives at home escape poverty. Destination countries often benefit as migrants fill critical roles, from advancing the technological frontier in Silicon Valley to building skyscrapers in the Middle East.
Despite the lure of higher wages, rates of migrants as a share of the global population have remained mostly unchanged for more than five decades, even as global trade and investment flows have expanded exponentially during this time. Between 1960 and 2015, the share of migrants in the global population has fluctuated narrowly between 2.5 and 3.5 percent, with national borders, distance, culture, and language acting as strong deterrents.
Highlights of key findings from the report include:
- Migration flows are highly concentrated by location and occupation. Currently, the top 10 destination countries account for 60 percent of around 250 million international migrants in the world.
- Surprisingly, concentration levels increase with skill levels. The United States, the United Kingdom, Canada and Australia are home to almost two-thirds of migrants with tertiary education. At the very peak of talent, an astonishing 85 percent of all immigrant Nobel Science Prize winners are in the United States.
- Education levels of women are rapidly increasing, especially in developing countries, but opportunities for career growth remain limited. As a result, college educated women from low and middle-income countries are the fastest growing group among immigrants to high-income countries.
“The number of international migrants continues to remain fairly modest, but migrants often arrive in waves and cluster around the same locations and types of jobs,” said Shantayanan Devarajan, World Bank Senior Director for Development Economics and acting Chief Economist. “Better policies can manage these transitions in a way that guarantees long-term benefits for both citizens and migrants.”
This Policy Research Report (PRR), Moving for Prosperity: Global Migration and Labor Markets, is an attempt to address this tension between the academic research and the public discourse by focusing on the economic evidence. We suggest a labor market–oriented, economi- cally motivated rationale to the political opposition to migration. Global migration patterns lead to high concentrations of immigrants in certain places, industries, and occupations. For example, the top 10 destination countries account for 60 percent of global immigration. Four states host half of all immigrants in the United States, and 10 counties host half of the immigrants in these four states. Immigrants are further concentrated in a narrow set of industries and occupations in specific geographic regions. The same pattern repeats itself in almost every major destination country. It is these geographic and labor market concentrations of immi- grants that lead to increased anxiety, insecurity, and potentially signi cant short-term disruptions among native-born workers. Furthermore, the positive effects and bene ts in the destination labor markets tend to be more diffuse whereas the costs are more concentrated and easily attribut- able to immigration.
Understanding (and empathizing with) these legitimate economic concerns is critical to informed and effective policy making. The goal should be to ease the costs of short-term dislocations of native-born workers and distribute more widely the economic bene ts generated by labor mobil- ity. Proactive interventions to ease the pain and share the gain from immi- gration are essential to avoid draconian restrictions on immigration that will hurt everybody. Ignoring the massive economic gains of immigration would be akin to leaving billions of hundred dollar bills on the sidewalk.
The report recommends various policy measures to ensure the benefits of migration are shared by host and immigrant communities for generations to come. Key among them:
- Effective migration policies must work with rather than against labor market forces. For example, where there is large unmet demand for seasonal work, temporary migration programs, like those in Canada or Australia, could address labor market shortages while discouraging permanent undocumented migration.
- Quotas should be replaced with market based mechanisms to manage migration flows. Such tools can pay for the cost of government assistance to support dislocated workers. In addition, the most pressing needs of the labor market can be met by matching migrant workers with employers that need them the most.
- Creating a pathway to permanent residency for migrants with higher-skills and permanent jobs creates incentives for them to fully integrate in the labor markets and make economic and social contributions to the destination country.
“We have to implement policies to address the short term distributional impact of migration flows in order to prevent draconian migration restrictions that would end up hurting everyone,” said Asli Demirguc-Kunt, Director of Research at the World Bank.
The report argues that migration will be a fundamental feature of the world for the foreseeable future due to continued income and opportunity gaps, differences in demographic profiles, and the rising aspirations of the world’s poor and vulnerable.
“The public debate over migration would benefit from recognizing data and research,” said Caglar Ozden, Lead Economist and the lead author of the report. “What this report tries to bring to the debate is rigorous, relevant analysis to support informed policy making.”
Moving for Prosperity: Global Migration and Labor Markets is the latest in a series of Policy Research Reports that comprehensively review the latest research and data on current development issues. The new report presents the key facts, research, and data on global migration gathered from the World Bank, U.N., academia, and many other partners.
Chosen excerpts by Job Market Monitor. Read the whole story at Global Migration Can Be a Potent Tool in the Fight to End Poverty Across the World—New Report