The world trade in human capital

An interesting aspect of world migration is how migration can be viewed as world trade in human capital, influenced by public policy. Some of the darkest passage in history involve forced migration (such at the Atlantic slave trade). Let’s look at three countries today.

The Philippines: leading exporter of human capital

The Philippines is a purposeful exporter of human capital. An government agency is tasked to look over and influence where its expatriates go. It looks after their welfare.  It exceeds all other studied countries in its “returns through remittances” (RTR) from emigration, meaning the impact of remittances is high compared to GDP and the emigrants form a relatively low share of the population. Three percent of the population is currently living in other countries, and remittances are equivalent to about 9% of GDP. This high RTR is due in part to the fact that a very high percentage of emigrants who are skilled (this is, at least, some college): 55%.

For closer looks at the Philippines go here and here.

For great many developing countries, at least a third of emigrants are skilled compared to those who stay – usually under 10%of the population. Bulgaria, among 34 developing countries, is the closest to the Philippines in the importance of remittances relative to the size of emigration.

In contrast, 10% of the Mexican population is outside the country but remittances are relatively low, equivalent to 3% of GDP. That’s because only 15% of emigrants are skilled, not much higher than the skilled share of the resident population (11%).

For great many developing countries, at least a third of emigrants are skilled compared to those who stay, which is usually below 10% of the population. Bulgaria, among 34 developing countries, is the closest to the Philippines in the importance of remittances relative to the size of emigration.

Australia: human capital importer

If the Philippines is a model human capital exporter, Australia is a model human capital importer. Among the resident population, 29% is skilled, but 42% of immigrants are skilled. The comparable figures for the United States are 52% and 42% — that is, immigration here lowers the average skill level. For Australia, 24% of the population is foreign born compared to 13% in the U.S.

Ireland: all mixed up

Some of the OECD countries have large gross stocks of both immigrants and emigrants. As a result, if migration had never taken place their population would be roughly the same. Ireland is the clearest example: its share of immigrants is 13%, but the share of emigrants is 16%. In a world without migration, its population would only be 3% higher.

Country by country analysis from “A Global View of Cross-Border Migration,” by Julian di Giovanni, Andrei A. Levchenko, Francesc Ortega. 2015

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