By Never before have so many people lived outside their home countries. Today 232 million people are living in a foreign country; in 1990, that figure was only 150 million. What is it that makes people migrate? And who benefits?
Most cross-border migration involves relatively few countries: Roughly half of all migrants live in only 10 nations. The United States is home to the largest number of immigrants (over 45 million), followed by Russia (11 million), Germany (10 million), Saudi Arabia (9 million), and the United Arab Emirates and the UK (8 million each). Topping the list of source countries are India, Mexico and Russia, with approximately 11 million emigrants each.There are a number of economic reasons why people choose to emigrate, which can be classified as push and pull factors. Push factors drive people to leave their countries, while pull factors attract them to another country. It is impossible to draw a precise distinction between them; indeed, both always play some role in an individual’s decision to emigrate.
Pull Factors: What Attracts Immigrants
Factors that draw immigrants include ample job openings, a high employment rate and high wages, as well as political stability. Pull factors play an important role in migration from Mexico to the United States, for example, as well as from India and Pakistan to the US and to wealthy oil-producing countries like Saudi Arabia and the United Arab Emirates, which have considerable demand for workers.
Migration within Europe, which has grown considerably in recent years, is also driven by pull factors. Today Poland and Romania are among the top three sources of immigrants to highly developed countries. Polish emigrants are drawn particularly to Germany, while Italy has become a popular destination for Romanians seeking work, at least in part because of language similarities. As a result of the economic crisis in southern Europe, emigration from countries like Spain, Portugal and Greece jumped by 45 percent between 2009 and 2011, with Germany and the UK the most important receiving countries.
Push Factors: What Drives Emigrants
Among the most important push factors are political circumstances such as war, persecution and a lack of civil liberties, but an absence of economic prospects also plays a role. These factors are particularly important in Africa, Latin America and South Asia, where large numbers of migrants have made their way from neighboring countries to large emerging countries such as South Africa, Brazil and India. Over three million people from Bangladesh are currently living in India, for example.
Countries like India and Russia can be simultaneously affected by both pull and push migration. The effects of push and pull factors vary for different population groups, depending on their level of education. Highly skilled individuals are more mobile and often able to choose from a number of host countries. This leads to competition for talent at the global level. Countries with strong pull factors, like the United States, attract the largest numbers of highly educated workers – from India and Russia, for example. Most people from Bangladesh, on the other hand, have few skills and little choice but to try their luck in India.
Losing Knowledge and Experience
Over the past 10 years, the number of highly educated immigrants in the most developed OECD countries has increased by 70 percent. Looking at countries of origin, it is clear that those are the countries where highly qualified individuals are most likely to emigrate. This underscores the fact that well educated people are highly mobile. An important exception is Mexico; Mexicans who emigrate to the United States tend to have low skill levels.
Host countries welcome the immigration of skilled workers because it solves the problem of a skills shortage, stimulating economic growth and even stabilizing wage levels. The situation is reversed in the home countries of these skilled workers. This “brain drain” – a loss of knowledge, experience and educated workers – has negative consequences for those countries. Particularly hard-hit are small countries and island nations in Africa, Latin America and the Caribbean, which are losing their elite populations. A much larger number of highly skilled individuals from Guyana, Barbados and Haiti are currently living in OECD countries than at home. In Europe, the rate of emigration by highly skilled workers is highest in Albania (27 percent), followed by Romania (18 percent), Ireland (17 percent) and Poland (16 percent).
Attractive Emerging Countries
In contrast, less than 3.5 percent of highly skilled workers leave Brazil, China, India and Russia – large emerging countries – to move to an OECD country. While even in those countries emigration by skilled workers is increasing in absolute terms, that growth is more than offset by a rapid increase in the number of skilled workers at home. It remains to be seen whether, over time, these large emerging countries will be able to attract more immigrants from today’s host countries in North America and Europe; this would intensify competition to attract mobile, well-trained workers. A first sign that this might be happening would be if more students from emerging countries who go abroad to study (for example in the US) were to return home after graduation.
Switzerland Is Desperate for Talent
Immigration is an important element in Switzerland’s success. Since Switzerland opened up its labor market, after reaching an agreement with the EU on the free movement of persons, immigration has primarily been determined by Swiss companies’ demand for workers. In 2013, nearly 40 percent of immigrants were employed in industries that are struggling to find qualified personnel with the necessary post-secondary or university education – such as the machine building industry, the watch industry and the health care system. Switzerland’s relatively favorable labor market situation is a crucial pull factor, attracting immigrants to fill the need for skilled workers. Following the referendum of February 9, 2014, the background to this issue has now changed. With the return to quota-setting, industry can be expected to again experience greater difficulty in finding qualified staff. Nonetheless, it will take the next three years to define the details. It remains to be seen to what extent a reduction in immigration will impact growth and prosperity in Switzerland.
By Bettina Rutschi, Economic Research, Credit Suisse & Lukas Gehrig, Economic Research, Credit Suisse
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