Emigration and Its Economic Impact on Eastern Europe

By Ruben V Atoyan, Lone Engbo Christiansen, Allan Dizioli, Christian H Ebeke, Nadeem Ilahi, Anna Ilyina, Gil Mehrez, Haonan Qu, Faezeh Raei, Alaina P Rhee, Daria V Zakharova

July 20, 2016

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Ruben V Atoyan, Lone Engbo Christiansen, Allan Dizioli, Christian H Ebeke, Nadeem Ilahi, Anna Ilyina, Gil Mehrez, Haonan Qu, Faezeh Raei, Alaina P Rhee, and Daria V Zakharova. Emigration and Its Economic Impact on Eastern Europe, (USA: International Monetary Fund, 2016) accessed November 21, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

This paper analyses the impact of large and persistent emigration from Eastern European countries over the past 25 years on these countries’ growth and income convergence to advanced Europe. While emigration has likely benefited migrants themselves, the receiving countries and the EU as a whole, its impact on sending countries’ economies has been largely negative. The analysis suggests that labor outflows, particularly of skilled workers, lowered productivity growth, pushed up wages, and slowed growth and income convergence. At the same time, while remittance inflows supported financial deepening, consumption and investment in some countries, they also reduced incentives to work and led to exchange rate appreciations, eroding competiveness. The departure of the young also added to the fiscal pressures of already aging populations in Eastern Europe. The paper concludes with policy recommendations for sending countries to mitigate the negative impact of emigration on their economies, and the EU-wide initiatives that could support these efforts.

Subject: Balance of payments, Income, Labor, Labor force participation, Migration, National accounts, Population and demographics, Remittances, Skilled labor

Keywords: Baltics, CESEE country, CESEE emigrant, CESEE emigration, Convergence, Eastern Europe, Emigration, Emigration from CESEE, EU migration scenario, EU policy scenario, Europe, Growth, Impact of emigration, Income, Income convergence, Labor force, Labor force participation, Migration, Migration flow, Remittance inflow, Remittances, SDN, Skilled labor, UN migration scenario, Western Europe

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2016/007
Stock No:

SDNEA2016007
ISBN:

9781475576368
ISSN:

2617-6750

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