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 %).

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.

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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