International Migration and the World Income Distribution

Emigrants moving from poor to rich countries experience large income gains on average. These gains are further augmented by remittances that allow a portion of the gains to be spent at lower sending-country prices. Taking advantage of recently available estimates of emigration-related income gains, this paper estimates the direct impact of international migration on the world income distribution. We find that international migration raises world income per person by just under 1 per cent, while it raises the incomes of those born in developing countries by approximately 21⁄4 per cent relative to the no-migration benchmark. Allowing for the remittance price effect augments these gains by about half. International migration also decreases the between-country component of world inequality (as measured by the between-country Theil coefficient) by about 2 per cent. While these aggregate income gains are significant, even small ‘brain-drain’ related adverse growth effects could quickly swamp the direct gains to migrants where rich-country immigration policies have a strong skill bias. A surer route to realising the potential of migration to increase world welfare would be to expand emigration opportunities for the less skilled. Copyright # 2009 John Wiley & Sons,