Labour market performance and migration flows - European ...

Chapter IFinal Reportsecond Intifada created a sharp rise in unemployment, which increased from 13% to 29% between 1999and 2006 (Hilal, 2007) – see box on this topic in Section 5.2.As far as the large countries of the Arab Mediterranean area are concerned, Ramamurthy (2003)finds that Egypt is the only country in his sample where emigration has a significant effect onemployment. Nassar (2005) argues that – notwithstanding data limitations and despite the fact that thebest workers rather than the unemployed migrate – the direct impact of migration on the Egyptianlabour market can be gauged from what happened during the Gulf crisis, when Iraq and Kuwait closedtheir borders, and many Egyptians were repatriated. Finally, it is important to underline that the labourmarket effects of migration need not be confined to the areas of origin of the migrants, as internationalmigration is closely linked to internal movements of people: it often induces the internal relocation ofthe labour force in a country 25 .But other effects (such as the effect on wages, the availability of skilled labour, participationsrates…) are more difficult to gauge. Take, for example, the net impact of remittances on the incentivesto work or to invest in education (the possibility of migration raises the expectations of students andtheir parents, encouraging increased investment in education). Analysing differences across regionaljob markets or basins in the same country could give valuable indications by correlating differences inlabour market performance with the level of migration in each of them (controlling for other factors totake into consideration), and hence on how migration affects labour markets.So the National Background Paper for Tunisia (Mahjoub 2009, pp. 45-48) approaches this issue bycorrelating an index of migration intensity (calculated as the number of migrants per 1000 inhabitantsbetween 1999 and 2004) and unemployment, labour participation rate (of women) and schoolenrolment rate (for the 6-14 age bracket). Whereas results of the correlation are not significant for thelabour participation rate, the exercise shows a significant inverse correlation between migration rateand unemployment rate by governorates and a positive one between migration rates and schoolenrolment rates. It exceeds the brief of this Study and of the National Background Papers to undertakesuch kind of analysis for all countries and labour market variables; but such a region-level analysis oflabour market and migration patterns, often requiring specific household surveys to be carried out,would be extremely interesting for this topic.5.2 Does Migration Cause Brain Drain in AMCs?Apart from the impact of financial flows generated by migration on the labour market and the directeffect on labour supply, the other major channel through which labour migration affects national labourmarkets is its impact on the availability of skills and qualifications in the workforce. Here the academicdebate (to a large extent based on evidence from outside the region) is far from conclusive.Literature on the brain drain is very rich and has also taken a twist in the last few years (see Beine,Docquier and Rapoport 2001; Beine, Docquier and Rapoport 2006, and Docquier and Rapoport. 2008).There is a strong empirical evidence that, in most of the developing world, it is the more skilled whohave the highest propensity to emigrate (Docquier and Marfouk, 2006; Hanson 2008). Traditionalliterature on the so-called brain drain (Bhagwati and Hamada, 1974) emphasized the adverse staticeffects of migration upon the endowment of skilled labour, with an ensuing negative developmentalimpact. If there are positive spillovers (externalities) associated with human capital or if education isfinanced through taxation, the emigration of skilled labour can hinder economic development. Possiblecorrections include taxing the emigration of skilled labour or requiring receiving countries to admit moreunskilled workers from the developing world (Pritchett, 2006).25 For instance, De Haas (2007) shows how migrant sending areas in Morocco became destinations for many internal migrants from other villages or from poorer regions; he cites Berriane(1996) and El Meskine (1993), who observe that many construction and agricultural workers in the Rif area come from the Tafilalt and Draa valley in Southern Morocco.69