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Global Economic Prospects for Increasing Developing Country Migration into Developed Countries

Author

Listed:
  • Dominique van der Mensbrugghe

    () (Development Prospects Group (DECPG) at the World Bank)

  • David Roland-Holst

    () (University of California, Berkeley)

Abstract

Global labor markets have evolved dramatically in the last several decades and will continue to so for some time to come, driven by changing population demographics, economic globalization, dramatic changes in transportation technology, and accelerating institutional change. All these characteristics of migration make it an essential policy issue for the human development agenda. The United Nations Human Development Report for 2009 intends to provide a forward-looking assessment of global labor market dynamics, with particular reference to the effects of increased labor mobility on global patterns of employment and output. To date, the most rigorous analysis of this subject is the World Bank Global Prospect Group’s forecasts with their Global Economic Prospects Linkage model. This report describes how an update of the GEP model captures more detailed information on global labor movements and heterogeneity, and reports new projections on global migration patterns. These results suggest complex market interactions between migrants and resident workers, whether native or migrant, and between labor and other factors of production. For example reducing migration raises the premium on migrant labor in the destination countries, while lowering the relative return to capital. The first effect makes for higher real income, consumption, and remittances for migrants of both types. For native populations in high income countries, the negative capital income effect dominates the wage effect of reduced competition from migrants. It is perhaps ironic that reducing labor competition is more beneficial to migrants, who lack the capital income and thereby gain absolutely from rising relative wages. Of course one of the primary demand drivers for migrants is the desire to profit from using capital resources more fully within high income economies. In OECD economies, pension schemes guarantee that a significant part of these profits accrue indirectly to native workers. Taken together, these results strongly support the argument that migration has beneficial growth effects on global real economic activity, improving the efficiency of international resource allocation for the benefit of both sending and receiving countries. However, these reassuring aggregate results mask more complex interactions in domestic labor markets, and there will inevitably be both winners and losers from the ensuing structural adjustments. Having said this, the existence of substantial aggregate gains, particularly new fiscal resources for the public sector, suggests the prospect of adjustment assistance to offset adverse impacts.

Suggested Citation

  • Dominique van der Mensbrugghe & David Roland-Holst, 2009. "Global Economic Prospects for Increasing Developing Country Migration into Developed Countries," Human Development Research Papers (2009 to present) HDRP-2009-50, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Oct 2009.
  • Handle: RePEc:hdr:papers:hdrp-2009-50
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    Cited by:

    1. Jose Antonio Alonso, 2015. "Managing Labour Mobility: A Missing Pillar of Global Governance," CDP Background Papers 026, United Nations, Department of Economics and Social Affairs.
    2. Bove, Vincenzo & Elia, Leandro, 2017. "Migration, Diversity, and Economic Growth," World Development, Elsevier, vol. 89(C), pages 227-239.
    3. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.

    More about this item

    Keywords

    Migration; globalization; North-South;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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