Migration and its Impact on The Economy

“Migration is an expression of the human aspiration for dignity, safety and a better future. It is part of the social fabric, part of our very make-up as a human family” – Ban Ki-moon

Migration is one of the most important issues of the state’s economy. It is stated as the movement of people from one place to another to reside or settle or to become a resident of that place. It is not only concerned with people migrating from one place to another, but it is also concerned with how their movement affects the whole economy. Continuous movement from one place to another has a significant impact on the economy in this contemporary society. Migration population in India is approximately 30 per cent of the total population. As per the census, the migration population hasn’t dropped over the decades, migration has a significant role in economic growth, but at the other hand, high mobility will increase the burden on a region that is much more developed.

Migration has an absolute economic and political impact on the economy for both the sending and receiving states. However, it includes both a positive and negative impact on both the host and the source state. Negative impact on source state can be brain drain which means when a highly qualified or trained personnel moves from his state to reside in another state. And a positive impact on the source state can be decreased in the level of unemployment and an increase in income of the other workers. In the case of the host state, the positive impact of migration can be the development of human capital and also helps in reducing skill shortages. And the negative impact can be increased dependence on welfare.

Types of migration

Internal migration- It means a change of residency between states, provinces, municipalities, or cities within national borders. An internal migrant is someone moving on to another administrative territory.

International migration- It is defined as changing residence across national borders. An international migrant is an individual who moves to another state. Furthermore, international migrants are classed as legal citizens, unlawful migrants and refugees.[1]

Immigration and Emigration- When individuals of one state move permanently to some other state, like- people from India shift to united states then to united states, it is called immigration, but it is termed as emigration for India.

Gross migration and net migration- The number of people coming to the state and the total number of people leaving the state to reside throughout a certain time is termed as gross migration. The distinction between the total number of people who come to live in a state and leave the state to live for a certain time is called net migration.[2]

Reasons for migration

Economic reasons

Economic reasons relate to the labour force of a state, its unemployment situation and the overall health of its economy. If economic conditions are not favourable and appear to be at risk of becoming unfavourable, the individuals will probably migrate to another state with better economic conditions. That will often lead to more people migrating from rural to urban areas. Individuals prefer to migrate to other states because of the opportunity of getting higher wages, better employment opportunities and, often, to escape the social and political situation of their home state.[3]

Demographic reasons

Age and sex are the main demographic factors that affect the migration of individuals-

Age- individuals who are of economically active groups are the ones who mostly migrates from one place to another in search of better opportunities.

Sex- men generally migrate to other places as compared to women even though after marriage more women tend to migrate to their husband’s place. This is also known as social mobility.

Socio-cultural reasons

In migration, social and cultural factors also play an important role. Sometimes family conflicts, the quest for independence, also cause migration especially, the younger generation. Better communication resources such as transportation, technology influence, enhanced network connectivity, entertainment, urban education, and the consequent shift in perceptions and beliefs also encourage migration.[4]

Environmental reasons

Climate change has also been a significant cause of migration and natural disasters. Climate change forecasts for the 21st century, however, imply that it is anticipated that more individuals would be on the move as a weather-related disaster like severe rainfall and humidity become more common and more severe, and climate change impacts livelihood.[5]

Impact of migration

There are several impacts of migration from rural to urban areas. Cities and towns where the migrant workers settle, experience countless problems. Numerous slums and tent cities are established in urban areas. Such colonies and large communities do not have access to municipal facilities such as safe water and water supplies, public utilities, power and sewage.

The impacts of migration on the labour market depend on the skills of the people who are migrating, the skills of existing workers, and the position of the host economy. They are also different in the short run and long run, as the economy and labour demand can be adjusted to increase in labour supply. Migration affects the labour supply, as it increases the pool of workers in various sectors of the economy. Also, migration is likely to increase the demand for labour, as the migrant’s increases demand certain goods and services, i.e. migration may increase competition for existing jobs in specific sectors but it also creates an opportunity for new jobs. [6]

When people migrate from rural areas it decreases population pressure on land, increases per worker productivity on land, then so does per capita income. This raises the income level, enabling farmers to follow improved factors of production, thus increasing agricultural produce.

The efficiency of an employee’s work may be calculated in terms of productivity and the impact on productivity from migrants can be more or less than the present level. Therefore, while GDP could increase overall due to new jobs, the increase may or may not boost the productivity of the workforce. If migrants are highly productive, per capita GDP increases. However, if the migrants didn’t work or didn’t increase productivity, the losses lower the GDP.


Migration is not a modern concept; it has been evolving since the 18th century. It is a process which involves the daily movement of people from one state to another. This movement of individuals has a larger impact on the economy. After analysing the various aspects of migration it can be said that there are various reasons due to which the individuals prefer to migrate to another state. People do so for their betterment and their welfare. They migrate to find better job opportunities and due to wage differences between the home and the host state. Some people move also due to socio-cultural and political reasons that they may be facing in their home state. And after summarizing all these reasons the main goal is their welfare only. Migration has a larger impact on the economy of the sending and the receiving state as well. The impact of migration is concerning trade, the labour market, employment, income distribution, productivity of the state. These factors play a key role in economic development. Thus impact on these factors directly hamper the process of development of the country.

[1] https://family.jrank.org/pages/1169/Migration-Types-Migration.html

[2] https://www.sociologydiscussion.com/communication/migration/migration-meaning-types-and-effects/3112

[3] http://www.futuredirections.org.au/publication/factors-influencing-migration-and-population-movements/

[4] https://www.worldofstatistics.org/files/2014/03/Pull-and-Push-Factors-of-Migration-Thet.pdf

[5] https://environmentalmigration.iom.int/environmental-migration

[6] https://migrationobservatory.ox.ac.uk/resources/briefings/the-labour-market-effects-of-immigration/

Ayushman Patnaik from Maharaja Agrasen Institute of Management Studies, New Delhi

You can find him here

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