Gains from the Liberalization of Temporary Migration

Abstract

We examine the potential gains for India from increased temporary migration of skilled workers from India to major recipient-countries of Indian migrant workers, in light of potential productivity gains from return migration. The article uses the GMig2 Global Bilateral Labour Migration Model and its supporting database to explore the impact on the Indian economy of liberalizing the temporary movement of skilled workers; and compares the welfare effects of this liberalization to those from domestic services sector liberalization in India. The results show that the welfare of Indian workers remaining behind in India improves as a result of temporary skilled labour migration. Although there is a welfare loss arising from out-migration, this is outweighed by the substantial increase in remittances back to India. There is also a clear improvement in total real income from the increased productivity brought back to India by the returning workers.