Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
Box 2.2. (continued)
The economic contribution of migrant workers to the host countries can be measured in different ways. One way is to look at the
increase in GDP made possible due to migrant workers by the increasing supply of labour. However, it is argued that immigrants
send home most of their salaries and wages. Even if it is assumed that migrant workers send home the entire amount of their
wages and salaries, the total income generated by them is much larger due to complementarities between migrant and native
workers and higher corporate profits, that is, the increment in GDP is much higher than the income of the migrant workers.
One approach to estimate this additional benefit uses the concept of consumer surplus (Borjas, 2010). Consumer surplus arises
due to lower prices that consumers pay as a larger supply of goods or services is made available by the migrant workers. Prices
also decline when migrant workers induce productivity gains through complementarities between them and native workers.
Based on this concept and using approximate values of the parameters and variables involved, the net benefit to the economy
of the Russian Federation due to migrant workers is estimated to be 0.13% of GDP, or $2.5 billion per year. The gain from
migrant workers in Kazakhstan, based on the same methodology, is estimated to be 0.57% of GDP, or $1.1 billion annually. These
estimates clearly show that the net benefit to the two host countries is quite large, even if it is assumed that migrant workers
remit their entire incomes back to their countries. In reality, migrant workers spend part of their incomes in the host countries
and generate demand for products, such as food, housing, health care and entertainment, and a wide range of commercial services.
As a result, aggregate demand further rises, resulting in higher GDP. Migrant workers, by making available an increased supply
of goods and services, also help control inflation. For example, Singapore used migrant workers very successfully to maintain
macroeconomic stability and industrial restructuring, and thereby enhance its international competitiveness.
These gains could be further enhanced with improved working conditions and social safety nets for migrant workers because
they would be more likely to invest in education for themselves and their children if they feel settled. Greater stability promotes
integration and assimilation, both of which factors help the host country’s economy. Policymakers in the subregion have already
realized the need for migration legislation, including social and legal protection for migrant workers, as they appreciate the
role of migrant workers. They are also aware of the need to find ways to help migrants adapt and integrate with people and
systems in host countries by, for instance, offering language training programmes. Appropriate regulatory frameworks should
be formulated in a regionally coordinated and harmonized manner as immigration issues always intermingle with other legal
problems. Meanwhile, authorities in the subregion are advised to avoid policies forcing migrant workers into vulnerable employment,
which would expose them to serious risk of abuse and exploitation.
There is no denying the fact that migrant workers, especially illegal ones, sometimes cause social problems in host countries,
but such situations could be minimized through the development of regionally coordinated migration policies and laws. In the
medium to long run, it is also essential to strengthen social safety nets, address income inequalities and focus on generating
employment opportunities at home.
a For further information, see World Bank, Migration and Remittances database. Available from http://econ.worldbank.org/WBSITE/EXTERNAL/
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