International Migration and Welfare Implications

This article surveys the current trend in international migration of labour, particularly from developing countries, with special emphasis on the welfare aspect of emigration on the remaining residents, and it also investigates the tension between brain drain and brain gain. It is evident from the existing literature that welfare of the remaining residents of a labour-sending developing economy can be influenced positively or negatively by exit of its skilled labour force. A detailed survey of the literature finds that positive probability of migration to a rich country raises the average skill level in the poor origin country. Migration in these studies work as a substitute for domestic tax-subsidy schemes aimed at raising the independently chosen low level of human capital to a socially desirable state. Related studies show that there can be both positive and negative impact of remittances on the welfare of the source country. JEL Classification: F22, F24, J24