From Departure to Development: How Emigration Shapes Human Capital and Growth in Pacific Island Countries

IMF Working Papers, September 11, 2026

Source details

Canonical URL: From Departure to Development: How Emigration Shapes Human Capital and Growth in Pacific Island Countries

Traditional emigration: permanent relocation of young, highly skilled individuals, primarily to Australia and New Zealand.
Recent emigration: expansion of labor mobility arrangements (LMAs) in Australia and New Zealand involving low-skilled young workers who typically return home.
Skill mismatches observed: many emigrants classified as highly skilled work in low-skilled jobs abroad, indicating limited skill acquisition while abroad.

Brain drain: traditional emigration results in a brain drain in home countries.
Education effects for LMA households:
- Children of LMA workers are more likely to drop out of school, undermining human capital accumulation.
Labor market effects:
- LMAs can reduce youth unemployment in sending countries by providing temporary employment opportunities abroad.

Near-term growth:
- LMAs support near-term economic growth through remittances.
Long-term output:
- Increased school dropout among children of LMA workers limits long-term output gains by reducing future human capital.

Temporary labor mobility as a development instrument:
- Temporary labor mobility can be a helpful development instrument to mitigate brain drain and reduce youth unemployment.
Complementary policies needed:
- Safeguard children’s education in LMA households to prevent increased school dropout.
- Promote the productive use of remittances to support sustainable development.
- Strengthen skills development and job creation at home to capture long-term benefits of emigration and return migration.