Temporary Migration, Remittances and Agriculture

Discussions within the World Trade Organization on the temporary movement of labour across borders have met with limited success, in spite of the potential benefits to both home and destination countries. Developed countries have been reluctant to allow increased immigration because of concerns about the social and economic impacts of integrating foreign workers. Recently available bilateral data on current migration flows, differences in wages and remittances makes it possible to estimate the potential impacts of temporary migration on wages and national income. Using a general equilibrium model that separates skilled and unskilled labour, we show that a three per cent increase in the labour force due to increased migration would increase national income in Australia and New Zealand by an estimated US$5 billion annually. Remittances sent abroad would amount to an additional US$750 million. Most developing country regions would benefit. More specifically, allowing in 10,000 temporary unskilled workers to work in the agricultural sector in Australia generates estimated welfare gains of US$100 million.