The migration of labor across international boundaries has increased rapidly since 1990. Over 190 million individuals now live outside their country of birth, and the majority of migrants leave developing countries for countries with higher living standards than their home countries. Remittance flows have risen quickly over the same time frame, and aggregate official remittance flows now double official development assistance. Participating in growing international migration is therefore a potential way for poor or vulnerable households to increase their living standards. Nevertheless, constraints against migration can prevent members of poor or vulnerable households from reaping its potential
benefits. Costs are the most obvious constraint, but policies in both the home and destination countries can also hinder migration. For example,
in some countries passports cost more than 10 percent of per capita gross domestic product, making them prohibitively expensive for the poor.
Similarly, migrant destinations often have policy preferences for highly skilled migrants, which can preclude migrants from poor or vulnerable
households, who tend to be low-skilled. Developed countries also use visa quotas to avoid absorbing too many low-skilled migrants, in part
because of perceptions that such migrants will strain social welfare systems. Costs and constraints combine to drive some migration underground; for example, it is estimated that 12 million immigrants in the United States are there illegally, and concerns exist elsewhere about migrants being forced into bonded labor or prostitution.
This brief explores how policy can help facilitate the use of migration to improve the living standards of poor or vulnerable households in developing countries. Since migration in general can be defined in several ways, the discussion is limited to international migration of individual household members specifically for the purpose of employment. The brief also highlights the formal costs of migration because they can be mitigated most effectively by pro-migration policy.
Given the focus on international rather than rural–urban migration, it is important to note that some of the policy prescriptions may not be appropriate for fostering rural–urban migration.
Migration, Its Benefits, and Poverty Reduction:
A rich theoretical and empirical literature covers the motivations of individuals in developing countries to migrate for work. Perhaps the most
obvious motivation is the difference in wage levels between countries sending and receiving migrants. For example, when Tongan residents
win a lottery giving them the right to move to New Zealand, their expected wages triple. But migrants also move for other reasons.
Migration is often part of a household income-generation or development strategy. From a rural perspective, when household income depends on agriculture, with its inherent risks, sending a migrant to a place where their income will not be affected by those risks can increase the household’s income security. Migration can also help raise funds for investment in better housing or in productive activities at home. Nevertheless, migration is also conditional on household characteristics given that migrants tend to be younger family members.
As a result, migration is not likely to help the elderly rural poor unless they have children that have migrated. Migration may have both direct and indirect effects on poverty. It can directly reduce poverty by reducing the number of people that a poor household must support. If the potential migrant was not working before leaving, this effect is particularly beneficial. Migrant remittances are also immediately beneficial when they are used to supplement consumption. More indirectly, migrants can and often do remit cash or goods to their families when negative income shocks occur.
Remittances help stabilize household income and prevent the household from plunging further into poverty. Migration and migrant remittances can also have indirect effects on poverty in the migrant’s home community. Migrants leave the local labor force, making local labor more scarce and pressuring wages upward, while remittances add liquidity to local markets, potentially stimulating economic activity.
Furthermore, returning migrants bring new skills and experiences with them, sometimes even starting microenterprises that create local employment. Finally, migration can help households make long term
investments, such as educating their children. As a result, there are several potential ways that migration can help increase the living
standards of poor or vulnerable households.