Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume IBut this traditional view of migration as a net loss of human capital and skills has recently beenqualified by factoring in the positive incentives it creates for increasing education investment on thepart of families in the countries of origin and accounting for the net increase of skills this investmentbrings about. In AMCs, given that returns on education are comparatively low in the region,migration, under the right circumstances, could offer a means of increasing those returns. Stark et al.(1997) argue that “higher prospective returns to skills in a foreign country impinge on skill acquisitiondecisions at home”, and this positively influences the sending country as only a fraction of the wouldbemigrants who increased their private investments in education in response to the prospect tomigrate succeed in turning that prospect into reality. In our region, this is most obvious in Lebanon,but also in other AMCs.Still, some recent theoretical and empirical contributions have introduced relevant caveats againstthe endorsement of excessive optimism here. The expected income-schooling profile at destination,which drives the educational decision of would-be migrants, can be reduced by relevant distortionfactors. Immigrants tend to be overqualified for the job positions they take (Mattoo et al., 2008), andare overrepresented in manual occupations. Mattoo et al. (2008) includes Egypt in their analysis ofbrain waste in the US labour market; they show that workers from the MENA region have a higherprobability of obtaining a qualified job if they hold a professional degree; however the probability ofobtaining a qualified job with a master degree is only 49 per cent for an Egyptian migrant, comparedto 80 per cent for an Indian.This notwithstanding, the static negative effect due to the drain of the “best and the brightest” isunlikely to be offset by a substantial positive dynamic contribution to human capital formation.Migration can also have a relevant influence on the endowment of specific kinds of labour, such ashealth-care workers or doctors and engineers. This is the most frequent concern regarding the possibleadverse effects of migration upon countries of origin (an argument often mentioned for Tunisia andMorocco, for instance in the National Background Papers).This need not represent an actual concern for the migrant-sending countries if the domesticeconomy is unable to productively employ skilled workers; then their migration would not represent aworrying brain drain, but it would rather be the consequence of a substantial mismatch between thehigher education system and the domestic labour market. The migration of skilled workers would thusalleviate the pressure on the labour market rather than represent a hindering factor for economicdevelopment. Indeed, in many AMCs the existence of large stocks of unemployed, underemployed or(in the case of women) inactive graduates would warrant the argument that those countries do not losepart of their human capital through migration, but rather valorise it and prevent its deterioration.Another important channel leading to loss of skilled workers or brain drain from developing countriesis through student migration. Many foreign students carry on living in the country where they moved toacquire higher education, and although the education costs fall on their families and/or the hostingcountries, the positive selection of these students entail a loss of human capital for the country of origin.In the case of AMCs, empirical evidence points to the need for a differentiated country-by-countryanalysis: in fact, some countries seem to suffer one kind or another of brain drain (in terms even ofshortage of qualified labour in certain sectors induced by migration), whereas others do not, or couldeven be experiencing a “brain gain” through the increased investment in education stimulated by theprospects of migration and the positive impact on skill availability among returning migrants. Wahba(2007) has demonstrated that migration ends up producing a certain degree of brain drain in Morocco,Tunisia and probably Lebanon, but not so in other countries of the region where there is a huge supplyof skilled labour.In percentage terms, Lebanon is the AMC where the loss of skilled workers is most evident: migrantsconstitute almost a third of Lebanon’s labour force, half of them skilled professionals. Data from the2001 USJ survey (the most recent available) shows that the emigration rate among the tertiary educated70