A Mexican immigrant carries luggage in New York | Photo credit: AP
Indians who migrate abroad often experience more than a 100% increase in their income, while Indians who continue to work in their home country often have to wait more than 20 years to get such an increase. This explains why most Indians going abroad They do not return home, even though they would benefit from a wage premium if they did so. These findings are based on a recent World Bank report titled ‘Migrants, Refugees and Society’.
The average income of Indians who migrate abroad increases by 118% (Chart 1) The income of international migrants from Bangladesh and Ghana increased by 210% and 153% respectively. The report says a major factor for economic migration is the wage gap between the country of origin and destination. A truck driver in Canada earns five times more than a truck driver in Mexico, even after adjusting for differences in the cost of living. Nurses in Germany earn almost seven times more than nurses in the Philippines.
Chart 1 shows the average increase in income (%) due to international migration.
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While the overall gain in income after migration is greater for high-skilled workers, low-skilled workers also experience a multifold increase in income. Low-skilled Indians who migrated to the US have seen their incomes increase by 493%. Low-skilled migrants from Nigeria and Yemen have seen their incomes increase by nearly 1,500%, the highest increase (Chart 2,
Chart 2 shows the growth in income of low-skilled workers who migrated to the US (in %).
The income of low-skilled Indians migrating to Gulf countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) has increased by 118% (Chart 3) Indians migrating to the UAE in particular experienced a growth of 298%. This calculation does not adjust income for purchasing power parity as most of the expenditure has occurred through remittances to the country of origin. About 85% of the earnings of Indian expatriates in the UAE are spent in India.
Chart 3 shows the growth in income (in %) for low-skilled workers in different migration corridors.
The potential gains in income are greatest when people move from low-income countries to high-income countries. A non-migrant from India would need 24 years of economic growth to match the gains made by an Indian moving to a high-income country, while a non-migrant from Bangladesh or Ghana would need 43 years and a non-migrant from the Philippines would need 78 years (Chart 4,
Chart 4 shows the number of years it would take for non-migrants in origin countries to match the economic gains made by migrants moving to high-income countries.
The report says that about 40% of migrants eventually return to their country of origin. However, this number varies depending on the destination. About half of all migrants leave Gulf Cooperation Council countries. About 20% to 50% of migrants leave OECD countries or move to a third country within five to 10 years of arrival. Fewer than 20% of migrants leave the US. Those who do are mostly from high-income regions such as Western Europe, Canada, Australia and New Zealand – in these cases, the return rate is over 40% (Chart 5) The return rate of Asian immigrants to the US is approximately 20%.
Chart 5 shows the share of immigrants leaving the United States by gender and region of origin.
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Temporary migrants who voluntarily return after staying abroad are better off than they were before they left. Migrants benefit from a wage premium when they return, especially if they are high-skilled workers. However, those who are forced to return face worse socio-economic outcomes. On average, less than 2% of migrants from the US, Canada, the EU, Japan and Korea are forced to return each year.
Source: Migrants, Refugees and Society