Emigration from the South Caucasus: who goes abroad and what are the economic implications?

Abstract

This article provides the first comparable cross-country empirical evidence on labour migration from the South Caucasus, based on a well-designed household survey from Armenia, Azerbaijan and Georgia. It quantifies recent emigration flows and provides preliminary evidence on the economic consequences of migration for the region. Results show that the most common destination for South Caucasian migrants is Russia and that the most common purpose of migration is to work abroad. An analysis of the demographic and socio-economic determinants of migration reveals that the migration flows do not involve mass emigration of skilled labour. However, this result is probably due to the relatively high cost of emigration to high-income countries. While individuals with higher education are not more likely to become migrants in general, having higher education is associated with up to four times higher probability of migration to a high-income OECD country among Armenians and Georgians. The results are in line with theoretical arguments that skill distribution and returns to education in the host country relative to the home country affect the selection of migrants, and that the cost of migration plays an important role in the migration decision. Further analysis suggests that migration indirectly boosts economic development in the South Caucasus by raising local incomes and demand. I also find a significant correlation between having a migrant and running a family business in Armenia, which suggests that migrants' earnings can provide scarce capital for business investment and support the development of the private sector in the region.