The economic effects of emigration: a literature review

Abstract

Despite great policy, social and economic relevance, the consequences of international population movements for the sending countries remain relatively under-researched. Migration economics has so far focused mostly on the impact of immigration, trying to explain how the movement of people affects the economic situation of the countries that receive migrants. Studies on the source economies are mostly empirical and analyse the effects of outward population movements on local labour markets, and in particular the wages of those who stay behind, as well as the consequences of brain drain. This paper conducts a review of the literature on the economic impacts of migration movements. It presents the current state of knowledge and main findings from existing empirical and theoretical studies, focusing on five areas: consequences of brain drain, implications for wages of non-migrants, role of the remittances sent by emigrants to the home countries, fiscal effects and welfare consequences. We describe different approaches used so far in the literature to evaluate the effects of emigrants on nonmigrants, focusing both on the methodology, findings and limitations. The article also tries to identify gaps in the existing literature, as well as the potential directions for future research. Finally, we place special emphasis on the consequences of population movements following the 2004 EU enlargement, and particularly, on the emigration from Poland as the largest economy entering the EU in 2004.