Characteristics of migrant workers: younger, low skilled, and concentrated in a small number of sectors and destinations

countries gain the most because of larger increases in capital return and quicker capital formation (Ahmed, Go, and Willenbockel 2016). Although the wages of natives with skills similar to those of immigrants can decline in the short run, natives with complementary skills typically benefit from an inflow of migrants (World Bank 2018b).

In recent decades, the large inflows of lower-wage and low-skilled South Asian migrant workers have contributed significantly to the high growth rates seen by GCC and high-income Asian countries despite relatively small national labor forces. In Saudi Arabia, the wages of foreign labor migrants have been as modest as one-fifth that of citizens (Hertog 2012). The national labor forces of GCC countries are small, as many locals prefer not to work in low-skilled professions (and their economic circumstances typically permit them to act on that preference), and women usually do not participate in the labor force (Shediac, Haddad, and Klouche 2010). South Asian labor migration has also been beneficial for high-income Asian countries, such as the Republic of Korea, which have been facing declining labor forces because of aging and low fertility rates (Cho et al. 2018).

Labor migration from Bangladesh, Nepal, and Pakistan shares similar characteristics. All three countries are lower-middle-income economies where sizable shares of the working-age population migrate overseas. Most migrants from these three countries are low skilled. When they move to destinations such as the GCC countries, they do so on a temporary basis through contractual labor arrangements before returning home after a few years abroad. They face similar vulnerabilities overseas and are subject to a range of possible abuses and shocks. In all three countries, migration is also largely male; female migration accounts for less than 5 percent of total international migration outflows. In contrast, outmigration from other countries in the region is rather different. In Afghanistan, migration systems are less mature, partly because of the conflict and insecurity there, though it currently seeks to send more migrants overseas. In Sri Lanka, a lower-middle-income country, migration systems are considerably more advanced than the three countries that are the focus of this book and female migration accounts for a large share of outflows. In India, migrants are increasingly higher skilled, and the implications for migration systems and policies are thus distinct.

CHARACTERISTICS OF MIGRANT WORKERS: YOUNGER, LOW SKILLED, AND CONCENTRATED IN A SMALL NUMBER OF SECTORS AND DESTINATIONS

South Asian labor migration is regionally concentrated in the GCC countries and Malaysia (figure 1.2). There is strong demand for low- and semi-skilled labor in the nontraded services sector of high-income countries, particularly in the Middle East. The GCC countries, where national workers are mostly employed in the public sector, attract many foreign workers to fill labor shortages in occupations in the private sector that nationals are unwilling to take. After intraregional migration is excluded, the stock of migrants from South Asia is heavily concentrated in a handful of economies, particularly the GCC countries. Just five economies host 81.5 percent of Bangladesh’s, 72.8 percent of Nepal’s, and 66 percent of Pakistan’s migrant stock. This high level of concentration increases the sending countries’ exposure to the consequences of shocks experienced in the