Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume IHighlightsThis paper provides an extensive theoretical overview of the rich array of effects thatmigration out of Arab Mediterranean Countries can produce on the labour markets of origincountries. Such a comprehensive overview is followed by a review of the – admittedly limited– existing empirical evidence, and a presentation of additional data that can be used toindirectly gauge the relevance of the various theoretical arguments. While there are still largeknowledge gaps, the value of this paper is a broad analytical framework to systematize thefindings for future research. We provide below a synthetic description of the mainconclusions in the existing literature:Migration softens the demographic pressure on the labour markets of AMCs□The unemployment-reducing effect of migration is stronger for small-sized countries.□ This effect is strengthened by a medium-term indirect effect, with the influence of migrationupon fertility choices, for the countries of the Maghreb.Migration exerts little to no effect on the female participation rates in the labour market, whichremain notably low in AMCs□ The positive income effect brought about by the receipt of remittances reduces the supply oflabour.□ There is a strong cultural resistance to a more active female engagement in waged economicactivities.□ The increase in female employment is mostly limited to family-run economic activities.The brain drain does not represent a serious concern for most AMCs□□□□□□□□Local labour markets have still an inadequate capacity to absorb the existing supply ofskilled labour.The brain gain mechanism is unlikely to play a substantial role for most AMCsReturns to skill are limited in most destinations, and the brain waste phenomena should notbe overlooked.The demand stimulus determined by remittances has a limited job-creation effect.Remittances can fuel the import of foreign-produced goods, and job-creation is mostlylimited to the non-traded sector.Investments financed by remittances and by return migrants can have a more relevant andlong-lasting effect on employment opportunities.Remittances help loosen financial constraints on investments.Returnees to AMCs have a higher propensity to opt for entrepreneurial activities.112