International migration and the world income distribution

Emigrants moving from poor to rich countries experience large income gains on average. These gains are further augmented by remittances that allow a portion of the gains to be spent at lower sending‐country prices. Taking advantage of recently available estimates of emigration‐related income gains, this paper estimates the direct impact of international migration on the world income distribution. We find that international migration raises world income per person by just under 1 per cent, while it raises the incomes of those born in developing countries by approximately 2¼ per cent relative to the no‐migration benchmark. Allowing for the remittance price effect augments these gains by about half. International migration also decreases the between‐country component of world inequality (as measured by the between‐country Theil coefficient) by about 2 per cent. While these aggregate income gains are significant, even small ‘brain‐drain’ related adverse growth effects could quickly swamp the direct gains to migrants where rich‐country immigration policies have a strong skill bias. A surer route to realising the potential of migration to increase world welfare would be to expand emigration opportunities for the less skilled.