An immigrant from Mexico picks up a delivery in New York
| Photo Credit: AP
Indians who migrate abroad often experience more than a 100% increase in their income levels whereas Indians who continue to work in their homeland often have to wait for over 20 years to get such a hike. This explains why most Indians who go abroad do not return home even if they benefit from a wage premium on doing so. These conclusions are based on a recent World Bank report titled ‘Migrants, Refugees and Societies’.
Indians who migrate abroad experience an average 118% increase in their income levels (Chart 1). International migrants from Bangladesh and Ghana experience a 210% and 153% increase in income, respectively. The report states that one key driver for economic migration is the wage gap between the origin and destination country. A truck driver in Canada earns five times more than a truck driver in Mexico, even after adjusting for the difference in cost of living. Nurses in Germany earn nearly 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 absolute gains in incomes after migration are higher for high-skilled workers, low-skilled workers also experience a multi-fold increase in income. The incomes of low-skilled Indians who migrate to the U.S. increase by 493%. The incomes of low-skilled migrants from Nigeria and Yemen increase by about 1,500%, the highest rise (Chart 2).
Chart 2 shows the income gains for low-skilled workers who migrate to the U.S. (in %).
The incomes of low-skilled Indians who migrate to the Gulf countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) surge by 118% (Chart 3). Indians who migrate to the UAE specifically experience a 298% increase. This calculation doesn’t adjust incomes for purchasing power parity because most of the spending occurred in the origin country through remittances. About 85% of the Indian migrants’ earnings in UAE are spent in India.
Chart 3 shows income gains for low-skilled workers in various migration corridors (in %).
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The potential gains in income are highest when people move from low to high-income countries. A non-migrant from India would need 24 years of economic growth to match the gains made by an Indian who migrated to a high-income country, while a non-migrant from Bangladesh or Ghana would need 43 years and one 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 who moved to high-income countries.
The report states that about 40% of all migrants eventually return to their country of origin. However, the number varies based on destination. All migrants leave Gulf Cooperation Council countries. About 20% to 50% of migrants leave OECD countries within five to 10 years of arrival or move to a third country. Less than 20% of migrants leave the U.S. Those who do are mostly from high-income regions such as Western Europe, Canada, Australia, and New Zealand — in these cases, the return rates are over 40% (Chart 5). The return rate of Asian migrants in the U.S. is about 20%.
Chart 5 shows the share of migrants who leave the U.S., by gender and region of origin.
Temporary migrants who return voluntarily after staying abroad turn out to be better off than before they left. Migrants benefit from a wage premium on coming back, especially if they are high-skilled workers. However, those who are forced to return face poorer socio-economic outcomes. On average, less than 2% of migrants are forced to return from the U.S., Canada, European Union, Japan, and Korea every year.
Source: Migrants, Refugees and Societies
Also read: India received over $111 billion in remittances in 2022, first country to ever reach that figure: U.N.
Vikram Sharma is a globe-trotting journalist with a global perspective on international events. His articles offer readers a global perspective on international events, exploring complex geopolitical issues and providing insights into the world’s most pressing challenges.
