Public Disclosure Authorized Towards Safer and More Productive Migration for South Asia Public Disclosure Authorized March 31, 2020 REVISED DRAFT Public Disclosure Authorized Social Protection and Jobs - South Asia Region Public Disclosure Authorized 0 Acknowledgements This report was prepared by a team jointly led by S. Amer Ahmed (Senior Economist, HSASP) and Laurent Bossavie (Economist, HECSP), under the overall supervision of Stefano Paternostro (Practice Manager, HSASP). Caglar Ozden (Lead Economist, DECRG) provided invaluable inputs throughout the preparation of the report. Amer Ahmed and Laurent Bossavie were co-lead authors responsible for Chapter 1 and 2, Amer Ahmed was lead author for Chapter 3, and Laurent Bossavie was lead author responsible for Chapter 3. The team that contributed to Chapters 1,2 and 3 included Esther Bartl, Laura Caron, Upasana Khadka, Maryem Khan, Csilla Lakatos, Sundas Liaqat, Sadia Sarwar, and Soonhwa Yi. The team that contributed to Chapter4 included Sundas Liaqat and He Wang. Joseph-Simon Goerlach (Assistant Professor, Bocconi University) made critical contributions on temporary migration in Bangladesh, in particular in Chapter 4. Rubaba Anwar, Ali Qureshi, Jyoti Pandey, Aneeka Rahman, and Jasmine Rajbhandary facilitated policy dialogue and coordinated stakeholder consultations with government counterparts in Bangladesh, Nepal, and Pakistan. The team is grateful for helpful feedback from officials of Bangladesh’s Ministry of Expatriate Welfare and Overseas Employment; Nepal’s Ministry of Labor, Employment, and Social Security; and Pakistan’s Ministry of Overseas Pakistanis and Human Resource Development. The team received helpful feedback from several colleagues with development partners including the International Labor Organization - Nilim Baruah, Deepa Bharthi, Richard Howard, Rahnuma Khan Michelle Leighton, Shabarinath Nair, and Laetitia Weibel Roberts; the International Organization for Migration - Sajjad Ahmed, Sharon Dimanche, and Ishita Shruti; and the Swiss Development Corporation - Nazia Haider. The team benefited from helpful conversation and comments from several World Bank colleagues including Andras Bodor, Yoon Cho, Supriyo De, Anastasiya Denisova, Manjula Luthria, Cem Mete, Sonia Plaza, Aneeka Rahman, Fahmina Rahman, Dhushyanth Raju, Martin Rama, Michal Rutkowski, Rebekah Smith, Mauro Testaverde, and Hans Timmer. The team also benefited from helpful feedback provided by participants of the December 2019 conference “Safer and More Productive Migration for South Asia: A Forum for Knowledge to Action” organized by the World Bank, and the “Demographic Change and Labor Mobility Workshop” organized by the World Bank, the Italian Ministry of Economics and Finance, the Italian Center for International Development, and the Centre for Economic and International Studies at the University for Rome Tor Vergata. This report was supported by the Rapid Social Response (RSR) Trust Fund, which also supported the Bangladesh Return Migrant Survey (BRMS) documented in a background paper by S. Amer Ahmed, Faizuddin Ahmed, Laurent Bossavie, Caglar Ozden, and He Wang. This survey was used for a series of background papers on temporary migration in Bangladesh by Laurent Bossavie, Joseph Simon Goerlach, Caglar Ozden and He Wang used as inputs throughout the report, and whose preparation were supported by the World Bank’s Research Support Budget (RSB). 1 Contents Acknowledgements ....................................................................................................................................... 1 Executive Summary ....................................................................................................................................... 4 International migration is a crucial part of South Asia’s development .................................................... 4 Multiple factors limit migration from having a higher development impact ........................................... 7 High concentrations of migrants in few markets expose countries to high volatility and future risks .. 12 Policy actions to make migration safer and more productive need to be holistic ................................. 15 There may also be opportunities to better harness the development potential of return migrants .... 17 References .............................................................................................................................................. 23 CHAPTER 1: MIGRATION AS AN ENGINE FOR SOUTH ASIAN DEVELOPMENT ........................................... 24 1.1 Migration from South Asia is low-skilled, temporary, and concentrated in a small number of sectors and destinations ......................................................................................................................... 26 1.2 Labor migration from South Asia is critical for the region’s economic development ...................... 31 1.2.1 Macro-economic level benefits for sending and receiving economies ..................................... 31 1.2.2 Microeconomic level benefits to migrants and their households ............................................. 36 1.3 Framing safer and more productive migration through a lifecycle lens ........................................... 39 1.4 Looking ahead to this report ............................................................................................................. 42 References .............................................................................................................................................. 45 Annex 1A: Mincerian regressions ........................................................................................................... 49 CHAPTER 2: SUPPORTING DEVELOPMENT COMES AT A COST FOR MIGRANTS ......................................... 51 2.1 Migration costs are both monetary and non-monetary ................................................................... 51 2.2 Institutional factors contribute to high costs and vulnerability ....................................................... 58 2.3 Institutional strengthening is critical to reducing migration costs and vulnerability ....................... 60 2.3.1 Institutions and interventions to support information structures about migration opportunities can be strengthened .................................................................................................... 60 2.3.2 Pre-departure orientation and training programs need to better prepare migrants for employment and life overseas ............................................................................................................ 65 2.3.3 Stronger public sector intermediation is also required ............................................................. 66 2.3.4 Capacity for services at destination needs to expand ............................................................... 67 References .............................................................................................................................................. 71 CHAPTER 3: INCREASING THE GAINS FROM MIGRATION ........................................................................... 76 3.1 The high costs of migration diminish the impact of migration for development ............................. 76 3.1.1 Increasing access to poorer households .................................................................................... 76 3.2.2 Reducing the propensity and volume of remittances ................................................................ 79 2 3.3 Current patterns are risks to resilient and sustainable migration for development ........................ 83 3.3.1 Global and host-country economic shocks affect demand for migrant workers ...................... 85 3.3.2 Labor market policies in host countries can reduce migrant labor demand ............................. 88 3.3.3 The impact of bilateral agreements between sending and receiving countries ....................... 90 3.3.4 Different shocks interact to drive volatility in migration flows ................................................. 91 3.3.5 Diversification to new destinations necessary, but maybe not sufficient, for sustaining migration and remittance flows ......................................................................................................... 95 3.4 Getting to more productive, resilient, and sustainable migration ................................................... 99 3.4.1 Sending countries can intervene unilaterally to improve information and invest in migrants’ human capital ..................................................................................................................................... 99 3.4.2 Bilateral and multilateral frameworks can reduce cost and improve outcomes .................... 101 3.4.3 Institutions needs to be stronger for both unilateral and bilateral interventions .................. 103 References ............................................................................................................................................ 105 Annex 3A: Regression Analysis ............................................................................................................. 109 Annex 3B: Event study .......................................................................................................................... 110 Annex 3C: Simulation model ................................................................................................................. 111 CHAPTER 4: HARNESSING THE DEVELOPMENT