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Despite returnees being a potential resource,
not all developing countries benefit from their return
Return migration can have multiple benefits. It
allows migrants who have accumulated savings abroad to ease credit
constraints at home and set up a business. Also, emigrants from developing
countries who have invested in their human capital may earn higher wages
when they return. However, whether the home country benefits from return
migrants depends on the migrant’s success in accumulating savings and human
capital and on the home country’s ability to make use of returnees’ skills
and investment. To benefit from returnees, home countries need policies that
encourage returnees’ investment and labor market reintegration.
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Data on rapid, unexpected refugee flows can credibly
identify the impact of migration on native workers’ labor market outcomes
Estimating the causal effect of immigration on the labor
market outcomes of native workers has been a major concern in the literature. Because
immigrants decide whether and where to migrate, immigrant populations generally consist
of individuals with characteristics that differ from those of a randomly selected
sample. One solution is to focus on events such as civil wars and natural catastrophes
that generate rapid and unexpected flows of refugees into a country unrelated to their
personal characteristics, location, and employment preferences. These “natural
experiments” yield estimates that find small negative effects on native workers’
employment but not on wages.
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Understanding how migration responds to tax changes will aid in setting the progressivity of a tax system
Decreased transportation costs have led to the transmission of ideas and values across national borders that has helped reduce the barriers to international labor mobility. In this context, high-skilled individuals are more likely to vote with their feet in response to high income taxes. It is thus important to examine the magnitude of tax-driven migration responses in developed countries as well as the possible consequences of income tax competition between nation states. More specifically, how does the potential threat of migration affect a country’s optimal income tax policies?
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Retiree migration can have economic benefits but
can also lead to intergenerational conflict in education spending
With the aging of populations, particularly in
more developed countries, retirees are becoming a politically influential
group. Government budgets have been feeling the strain on social insurance,
health care, and other programs that benefit the elderly. Yet spending on
these programs has often come at the expense of other programs such as
education, which benefit primarily the younger population. Attracting
retirees has been viewed as an important avenue of economic development,
with positive impacts on revenue and expenditure. However, it can also have
a negative impact on education spending potentially resulting in
intergenerational fiscal conflict.
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Reliable estimates of taxpayer effects are
essential for complete economic analyses of the costs and benefits of
immigration
Taxpayer effects are a central part of the
total economic costs and benefits of immigration, but they have not received
much study. These effects are the additional or lower taxes paid by
native-born households due to the difference between tax revenues paid and
benefits received by immigrant households. The effects vary considerably by
immigrant attributes and level of government involvement, with costs usually
diminishing greatly over the long term as immigrants integrate fully into
society.
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High-quality enclave networks encourage labor
market success for newly arriving immigrants
Immigrants are typically not evenly distributed
within host countries; instead they tend to cluster in particular
neighborhoods. But does clustering in ethnic enclaves help explain the
persistent differences in employment rates and earnings between immigrants
and the native population? Empirical studies consistently find that residing
in an enclave can increase earnings. While it is still ambiguous whether
mainly low-skilled immigrants benefit, or whether employment probabilities
are affected, it is clear that effects are driven by enclave “quality” (in
terms of income, education, and employment rates) rather than enclave
size.
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Corruption is a driving force of emigration,
especially for high-skilled workers, but also for other workers
Knowing whether corruption leads to higher
emigration rates—and among which groups—is important because most labor
emigration is from developing to developed countries. If corruption leads
highly-skilled and highly-educated workers to leave developing countries, it
can result in a shortage of skilled labor and slower economic growth. In
turn, this leads to higher unemployment, lowering the returns to human
capital and encouraging further emigration. Corruption also shifts public
spending from health and education to sectors with less transparency in
spending, disadvantaging lower-skilled workers and encouraging them to
emigrate.
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International migration boosts travel and vice
versa, bringing economic benefits but challenging public policy
The ongoing relationships between emigrants and
their families, friends, and business contacts in their home countries can
increase outbound and inbound cross-border travel, while cross-border
tourism and business and study trips can trigger migration. New
communication technologies, such as social media and video chat, only
partially substitute for face-to-face meetings. In fact, the greater use of
such technologies boosts demand for in-person meetings. Short- and long-term
cross-border movements are becoming more complex, creating challenges for
measuring immigration and for defining target populations for legislation
and public policy.
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