From Departure to Development: How Emigration Shapes Human Capital and Growth in Pacific Island Countries

Emigration continues to shape the demographic and economic landscapes of Pacific Island Countries (PICs), though patterns and impacts vary widely across the region. This paper examines emigration trends in PICs and their implications on human capital and growth. We find that traditional emigration, which is largely characterized by a permanent relocation of young, highly skilled individuals—primarily to Australia and New Zealand—results in a brain drain in home countries. Moreover, many of these emigrants work in low-skilled jobs abroad, indicating significant skill mismatches and limited skill acquisition. More recent emigration has been driven by the expansion of labor mobility arrangements (LMAs) in Australia and New Zealand, involving low-skilled young workers who typically return home. These LMAs offer opportunities to mitigate brain drain, reduce youth unemployment, and support near-term economic growth through remittances. At the same time, children of LMA workers are more likely to drop out of school, thus undermining human capital accumulation and limiting long-term output gains. From a policy perspective, the results suggest that temporary labor mobility can be a helpful development instrument, while complementary policies are needed to safeguard children’s education, promote the productive use of remittances, and strengthen skills development and job creation at home.