Upward or Downward: Occupational Mobility and Return Migration - Economic Research Forum (ERF)

Upward or Downward: Occupational Mobility and Return Migration

Upward or Downward: Occupational Mobility and Return Migration

By Jackline Wahba, Professor of Economics at the University of Southampton and ERF Research Fellow.

For many poor developing countries, the emigration of the high skilled workers is a source of concern. As such, the brain drain is seen as a negative consequence of international emigration. However, international migration can lead to brain gain when the aspiration of emigration increases the incentives to get education, as this increases the possibility of emigration. Another channel through which the emigration of high skilled workers results in a brain gain is return migration, when returnees acquire new skills overseas and return to their origin countries with enhanced human capital.

As such, temporary migration provides an opportunity for workers to acquire physical capital, to accumulate savings and assets and most importantly to acquire new skills and knowledge. Upon return to their home country, migrants represent an inflow of both human capital and financial capital. The return of migrants can be a potential source of economic growth for the origin country through increased productivity and knowledge diffusion.

The literature on the impact of international migration on the human capital accumulation of returnees has focused on the wage premium earned by return migrants compared to non-migrants. Overall the evidence suggests that there is a positive wage premium associated with overseas work migration for returnees in developing countries, see for example Wahba (2015) for evidence on Egypt. Another measure of the acquisition of human capital of temporary migrants is their skill upgrading or occupational mobility. Whether migrants acquire human capital whilst overseas is an important question for the economic development of the home developing countries since the public debate tends to underscore the negative impact of high skilled emigration, resulting in a brain drain for origin developing countries.

The paper by Nelly El Mallakh and Jackline Wahba, contributes to this literature by providing evidence on the impact of temporary migration experience on human capital accumulation of returnees by examining occupational mobility, a hardly studied issue, of return migrants vis-à-vis working-age individuals who have never migrated, controlling for the non-random nature of migration. Unlike the studies on wage premiums where wages of returnees are only observed at the time of survey, we are able to construct individual occupational mobility based on the first job and the current occupation. Furthermore, we adopt a novel approach in order to identify the impact of overseas migration by constructing cohort groups who entered the labor market in the same decade to control for the initial labor market conditions and examine current occupational mobility relative to their first job.

This research question is important for two reasons. On the one hand, the answer to this question is not straightforward. Temporary migrants might acquire additional human capital due to their work experience abroad and hence, the human capital accumulated abroad might help those temporary migrants to find occupations higher in the skill and remuneration ladder upon return. Conversely, it might be the case that temporary migration experience is motivated by the shortage of unskilled labor in destination countries and subsequently, the positive effects of temporary migration on human capital and occupational mobility might be contested. Whether temporary emigration and overseas work experience enhance human capital accumulation is an important question. In particular, whether return migration can provide a leeway to promote the economic development of sending countries and compensate for the loss of human capital due to outward migration, through the returnees’ higher human capital remain to be understudied issue.

The results show that returnees are more likely to climb up the occupational ladder compared to non-migrants. In particular, the most educated returnees, those who have secondary education or above, seem to climb the ladder more so than less educated individuals. Overall, the evidence from this paper suggests that return migration can lead to a brain gain to countries of origin.

About the author
Jackline Wahba is a Professor of Economics at the University of Southampton in the United Kingdom. She is a member of the UK Migration Advisory Committee. She is an economist with substantial experience in international migration and labor markets in developing countries. She has published in several leading Economics journals. She leads the migration strand within the ESRC-funded Centre for Population Change at Southampton. She has acted as an advisor to several international organizations, including the EC, World Bank, and OECD on labor market related issues. She is also the chair of ERF›s Advisory Committee. She is a research fellow of IZA, CReAM, and ERF, a member of the Scientific International Migration Panel of IUSSP and the managing editor of the IZA Journal of Labor & Development. She obtained her PhD from the Department of Economics at the University of Southampton and her MA in Economics from the American University in Cairo.