Statsguru: Is migration good for the economy? Here's what data shows

Migration could be a major driver of economic growth amid ageing populations in high-income countries, according to the recently released World Development Report 2023: Migrants, Refugees, and Societies.

Demographic changes in recent decades have meant that there are fewer working age people to support the social security needs of elderly populations in rich countries. Money earned by the working population helps support the expenses of those who have retired. There were seven working adults for every elderly person as of 1950 in high-income Organisation for Economic Co-operation and Development (OECD) countries. This is expected to fall below two by 2050 (chart 1).

 

The gap can be filled by migrants with necessary skills, suggested the report, advocating smoother immigration norms matching needs for both desti­na­tion and source countries. This could be a positive for India, which has historically been a major bene­fi­ciary of migration with remittance inflows estimated to have topped $100 billion last year (chart 2).

The gains of remittances, which can provide financial support in home regions, extend to internal migration. India’s internal migration had been rising with an estimated 450 million migrants as of 2011. No census has been conducted since, but projections based on previous rounds suggest flows towards the more industrialised states from regions that have had fewer employment opportunities (charts 3, 4).

Income gains are significantly higher for international migrants. Internal migration can result in over 40 per cent higher income. This rises to 118 per cent in the case of international migration, according to data from the World Development Report (chart 5).

Highly educated and skilled migrants can help set up new industries and fuel innovation in their home countries, noted the report. It pointed to the large proportion of Bengaluru ventures set up by Indians returning from abroad. Those who migrate gain almost immediately from the availability of better opportunities; unlike the slower, trickle-down gains that eventually accrue to their home towns and those they leave behind. Even at India’s relatively high rate of growth, it will take a person who stays back around 24 years to match economic gains of working in high-income countries (chart 6).