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GTAP Resource #2054

"The Liberalization of Temporary Migration: India’s Story"
by Ahmed, S. Amer and Terrie Walmsley

The General Agreement of Trade in Services (GATS) identified four specific ways or modes of delivery for services to be traded. The fourth - Mode 4 - was the temporary movement of natural persons (TMNP) across countries, and due to the politically sensitive nature of any migration policy, it has received the least attention in trade and trade discussions. However, given the increasing global demand for skilled labor, Mode 4 has gained policy interest as being a politically viable alternative to permanent migration.

Mode 4 is economically very significant to India given the large and untapped comparative advantage that it has in labor intensive services. India can export highskilled labor services in large volumes - as has been seen in the case of its IT sector. The literature has shown that most parties involved in TMNP liberalization have something to gain from the increased trade in workers. However, issues such as brain drain, brain circulation, and effect of remittances by expatriate workers for India have muddied the waters in the temporary migration debate.

In this paper we examine the potential gains for India from increased TMNP liberalization between India and its major labor importing partners in light of return migrants and liberalization of the services sector.

The paper uses the Global Bilateral Labor Migration (GMig2) model. This model assumes a revolving door, which is extended to take into account the fact that a) not all migrants may return home; and b) that those who do return home may now have higher productivities. Simulations are undertaken that explore the effect of the liberalization of skilled labor movement and return migration on the Indian economy and welfare.

It is found that the welfare of the Indians remaining behind in India improved as a result of the skilled labor migration. Although there is a degree of brain drain, its effects are mitigated by the increase in remittances. There is also a clear improvement in total real income - brain gain - due to the increased productivity brought back by returning migrants.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Date: 2006
Created: Walmsley, T. (5/1/2006)
Updated: Ahmed, S. (2/6/2008)
Visits: 4,179
No keywords have been specified.

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