We must not ignore human capital formation in the migration for development discourse

Written By: Omololá S Olárìndé

Date: 2021-12-10   
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The migration for development discourse has come full circle, from the concerns for skill depletion at origin countries to fresh perspectives on how mobility enhances skill gains in Bloom and Stark’s seminal work in 1985. The research has now settled on a myriad of benefits of migration ranging from remittances to source countries, transnational linkages that facilitate trade, and exchange of ideas and more. Hardly any economic scholar doubts the importance of human capital to national socioeconomic progress, so more discourses should focus on the benefits of migration through the connections between migration and skill formation.

Immigrants contribute to growth through consumption and payment of taxation and the magnitude can be significant as is the case of Côte d’Ivoire where they accounted for 19 per cent of growth. The prominent policy discourse places too little attention on the distributional effects of labour mobility on workers. Where migration for development programmes exist, they tend to build skill sets that are not transferable and focus too closely on restricting migration in exchange for development funding.

The shift in focus in some studies to efficient labour markets, as a frame through which to view migration returns, is a practical response to the reality of labour shortages in industrialised nations and surpluses in less industrialised, highly populated, countries. There is little doubt that migration creates overall net positive benefits, but the concern is that such benefits are not evenly distributed. This is especially so when human capital is unevenly redistributed as a result of migration, so that skilled workers tend to leave less productive countries of origin for more productive ones. Such a reallocation of workers will be problematic for less productive countries, in the case that the same skill sets are needed across the globe, for example in the health sector. In such cases where skill requirements are homogenous, the more efficient markets will attract highly productive workers.

By 2030, the world will need to add 15 million health care workers to meet its universal health coverage goals. Nigeria, prominent in Africa as one of the largest human resources for health care, still has a density of nurses, midwives, and doctors of 1.95 to 1000, according to the World Health Organisation. There is not much improvement in the formation of these professional skills, for instance, less than a thousand professionals became certified midwives in Nigeria the year 2020. Since more industrialised countries have more efficient markets, which attract skilled migrants, it can be anticipated that skilled workers will prefer to move to those countries, depleting the human capital stock at source.

There is some evidence that an increase in migration is positively associated with increased education and health at destination countries. The New Economics of Labour Migration (NELM) supports the idea that market inefficiency arises when individuals do not adjust their preference to the social optimum; and this can happen in the absence of incentives such as education subsidies or migration. Yet, there is a need to explore more closely in country-by-country cases the impact of labour mobility on human capital formation and stock, using more recent theoretical models. Some increases in human capital formation can be expected from individuals themselves and may need no collective effort to generate.  This would be the case for the category of migrants described in Mabogunje’s ‘as city dwellers’ or those he conceptualises as responding promptly to market opportunities for migration.

As long as wages depend on levels of education, and there is openness to migration, individuals will be incentivised to build human capital, since migrants associate those skills with better earnings, and they have the opportunity to move globally. In order to ameliorate the human capital depletion, that could result from migrants moving away from origin countries, more skills need to be developed globally in several sectors than private incentives permit. Studies reporting on skill exchanges and representing markets as global systems of skill exchange would have to consider how migration affects human capital formation rather than focus solely on redistribution of labour to efficient markets. The immediate response of source and destination countries should focus on how to harness skill formation, while still facilitating labour migration.

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Omololá S Olárìndé, PhD is a university-based researcher, in the Economics Department of Elizade University. Her research covers migration governance, labour markets and spatial distribution of African migrants, migration and human capital formation. She is an Associate Editor with the African Review of Economics and Finance. She is a member of the Network of Migration Research on Africa (NOMRA) where she is currently working on the Migration for Inclusive African Growth (MIAG) Research Project.