The Case for International Labour Mobility
Why more people should focus on helping low-income workers access jobs in high-income countries
Thandiwe can either earn $0.72 per hour or $25.72 per hour. Which should she choose?
She’s a recent high-school graduate in Malawi. Because she’s hardworking and entrepreneurial, she is set to earn $1,500 a year once her career gets going (double Malawi’s GDP per capita of $721)
However, if she could learn German to B2 level and enrol in a nursing apprenticeship course in Germany, in a few years she would be earning $53,500 per year, a 35x increase. The same person, with the same natural talents, but just relocated to a different place.
The economist Michael Clemens refers to this as “trillion-dollar bills on the sidewalk.” The income gains from moving a worker from a low-income country to a high-income country dwarf almost any other change you could make to their life.
The numbers
Here is what Thandiwe’s move looks like in practice:
Not only can Thandiwe increase her own income by 35x, by sending a modest 10% of her income back to her family, she can double the income of 7 of her family members.
Who else benefits
Thandiwe and her family benefit enormously. But they’re not the only stakeholders here. If Thandiwe leaves Malawi for Germany, how does it affect Malawi, Germany, and her new employer?
The origin country (Malawi)
Remittances are the obvious part of the equation here. If Thandiwe moves then Malawi will receive a steady stream of foreign currency transfers and Thandiwe’s family are far more likely to send their children to school, build a business and spend in the economy.
The benefits to the origin country go far beyond income transfers.
The Indian tech sector is a great example. In the 1990s as America’s tech sector began to take off, many talented Indians moved to the US to work in IT. By 2014, 86% of H1B visas for Computer Science roles were going to Indians.
This created a large pool of high-level tech professionals in the US with strong connections to India. And it also created incentives for young Indians to invest in learning CS and tech skills because the prospect of moving to the US to 10x their income was so enticing, even if most of them would not end up moving.
At a smaller scale, the African tech scene has followed the same pattern. The vast majority of successful startup founders in Africa studied or worked outside the continent before coming back to build.
So, in the long-run Malawi can end up with more foreign-exchange, more linkages to high-income markets and more talent.
The destination country
Rich countries are aging. In 1980, the average OECD country had 5.3 workers per elderly person in their population, by 2023 that had fallen to 3.2 and by 2060 it is set to reach 1.9. This leads to a shortage of workers across industries and particularly in sectors like care and nursing.
Labour migration is the obvious solution to manage this. If destination countries can bring in appropriately skilled working age people to fill labour shortages then this boosts economic growth, keeps costs down for the consumer in those sectors and these migrant workers tend to be net fiscal contributors over the course of their lifetimes.
This is by no means true for all forms of migration all the time. Populations who do not have the legal right to work on arrival (such as refugees in many countries) are inevitably a fiscal drain in the short-term. Additionally, migrant groups who fail to properly integrate can cause broader (and sometimes very serious) societal problems that might undermine the benefits of their labour market contributions.
However, if young foreign workers move directly into job placements in sectors with shortages, have the appropriate work training, learn the language, and sufficiently integrate, then the benefits to the destination country are clear.
The hiring company
Finally, the hiring company, in this case a German hospital. In 2023, the Federal Employment Agency reported only 44 jobseekers for every 100 registered nursing vacancies. In fact, the shortage of nurses is so pressing that hospitals are routinely willing to pay recruitment fees of $15,000+ for qualified German-speaking nurses. International recruitment fills a gap that domestic hiring cannot and helps to keep healthcare affordable for Germany’s ageing population.
Common objections
It seems that at least in some cases migration can produce the ‘quadruple-win’ beloved by migration policy reports, benefitting workers, employers, source countries and destination countries. However, there are still several common objections to assess.
“Brain drain”
Migration can benefit the domestic supply of skilled workers, as the Indian and African tech examples show.
Many of those workers who go overseas develop new skills and accumulate capital before moving back home again. In fact, around 40% of African migrants leave their destination country within five years, many of whom choose to return to their country of origin.
Additionally, increasing the economic return to developing skills will increase the incentive for workers to invest in those skills. The possibility of working in tech in the United States caused many Indians to go to engineering colleges and learn tech skills, most of whom then stayed in India and contributed to the domestic economy.
A study from the Philippines shows that after a policy change in 2004 opened up more opportunities for nurses to migrate to the United States, the resulting increase in Filipinos qualifying as nurses was 9x larger than the number of nurses that actually ended up moving to the US.
Finally, Africa does not suffer from a shortage of workers. Every year, 12 million young Africans enter the workforce and only 3 million new formal jobs are created.
Looking specifically at nurses, a study across 18 low-income countries (14 of which were in Africa) showed that 39.7% of trained nurses and midwives were unemployed. Many African countries already have more trained nurses than they can employ.
Thandiwe going to Germany does not create a shortage of nurses in Malawi but it does increase Malawian national income through remittances and gives the government more resources to hire the nurses it needs.
“Labour migration is exploitative”
The benefits of life in Europe for someone in Malawi are clear. Enormous income increases and access to infrastructure, social services, and a quality of life that would not otherwise have been possible. One concrete source of evidence for this comes from Malengo, a non-profit that has enabled hundreds of Ugandans from low-income backgrounds to move to Germany for education and work. They are running a randomised control trial on their ‘scholars’ and find that they report significantly improved wellbeing, as do their families, after they move to Germany.
Migration to the Gulf receives far more criticism and deservedly so. The Kafala system ties workers to specific employers, many migrants are misled regarding their contract terms and some workers (particularly women in domestic work) suffer serious abuse.
Despite that, the experience for most workers going to the Gulf in formal pathways is rather more positive than the headlines would lead you to believe.
A survey of migrant workers in Qatar found that 80% said their quality of life was “somewhat better” or “much better” than at home, while only 11% said it was worse. 92% were either “very satisfied” or “somewhat satisfied” when asked whether their rights were being respected.
Another study asked 2,000 migrants returning to Kerala after working in the Gulf what their immediate life plans were. Half said that they wanted to re-migrate immediately, while the other half planned to start a business or find a job locally.
Finally, Nepalese government data shows that migrants in the Gulf experienced a death rate of 6.5 per 10,000, against 23 per 10,000 for comparable demographics in Nepal. This is not to say that working in the Gulf is necessarily safer than being at home in Nepal though, because the study was unable to control for the selection effect that only healthy people would choose to migrate. But once again, the data does not support the narrative of universal suffering and abuse.
Many migrants to the Gulf are exploited and mistreated, whether by dishonest brokers up-front or abusive employers once they arrive, but this is not a universal experience. The appropriate response is to try and build a better system rather than to condemn Gulf migration in its entirety and therefore either yield the space to bad actors or to try and deny low-income Africans a life-changing economic opportunity.
“Why not focus on remote work opportunities?”
Countries like India built significant export sectors from service outsourcing. But that model is now under serious threat from LLMs.
The type of work that can be neatly packaged and sent across the world to someone is exactly the work that AI is best suited to replace. The major publicly listed outsourcing firms (call centres, data entry, basic software development, document processing) have seen stock prices drop 62.5% since ChatGPT launched.
Higher-complexity outsourcing may survive longer and new sectors may appear as AI reshaped the economy. Overall though, it seems likely that large-scale, low-complexity remote work will be one of the first areas to be automated by AI.
Meanwhile, professions that require human interaction and complex motor skills (such as nurses or tradespeople) are the least at risk from AI and also the sectors with the biggest existing shortages in high-income countries.
“You’re giving up on jobs in Africa”
If you care about actually making things happen rather than ideological purity, you have to accept trade-offs. With 12 million people entering the workforce each year and 3 million formal jobs being created each year, even radical improvements in job creation will not meet the needs of Africa’s next generation. What’s more labour mobility stimulates the economy of the origin country through remittances, economic linkages and skill-accumulation, thereby supporting job creation in Africa.
As for the Africa Jobs Fund specifically, our other core focus is actually on creating high-productivity jobs in Africa through export manufacturing.
“Rich countries are shutting their borders”
While a few countries are reducing migration, that is not the trend. As the chart below shows, permanent migration has been increasing across the OECD. Don’t make the mistake of over-generalising based on current American politics.
In general, the evidence suggests that voters broadly support migration when it is orderly and tied to public benefit. Research by Alexander Kustov suggests that voters are actually broadly supportive of orderly labour migration that is tied to the public benefit. The political backlash is primarily generated by irregular migration and the perception that governments are not prioritising the interests of citizens. For example, the chart below shows that immigration concern in Europe is much more closely linked to arrivals of asylum seekers than to regular immigration flows.
Italy’s recent immigration policy is a perfect example of this political calculus. Meloni’s nationalist government has cracked down on illegal migration and reduced pathways to citizenship, but at the same time they have liberalised parts of the labour migration system and made it easier for overseas workers to come to Italy.
It seems likely that many OECD countries will continue to see anti-immigration backlash and policies will swing back-and-forth based on political turnovers. In the end though, the long-term need for workers is clear and citizens are broadly supportive of productive orderly migration.
Getting there
So what would it actually take to get Thandiwe to Germany?
For Thandiwe to make that move, she needs to overcome some hurdles:
Learn German to intermediate (B2) level. Germany requires migrants to speak intermediate German but Thandiwe has limited access to German classes in Malawi and the cost to get to B2 would likely be more than her entire annual income.
Find a placement in Germany. Hospitals have significant nursing shortages, but how does Thandiwe get a placement for herself when she has no connections and no one to vouch for her.
Figure out the visa and logistics. Thandiwe has never travelled overseas before and she needs to get a passport and visa, book flights, and then set-up a whole new life in Germany.
Some version of this set of problems is present across most labour mobility corridors. Most migrants have to overcome challenges with financing, language learning, job placement, visas and logistics.
Different corridors have solved these challenges to varying degrees. For example a worker in Nairobi has the privilege of choosing from a few different German language schools, but he still lacks access to financing to cover the costs.
The opportunity
How can we fix these barriers and build a system that works for everyone?
Labour migration from Africa runs almost entirely through private sector intermediaries: recruitment agencies, language schools, training providers, financing companies.
Government regulations shape the structure of the industry, but the many well-meaning public-sector efforts to actually operationalise the work of labour migration agencies tend to fall flat. They are not disciplined by the need to meet the requirements of employers in the same way and grant funded projects do not have the same scale potential as for-profit companies.
The private sector is the primary actor in labour migration and there are many profitable, scalable, high-impact businesses to be built.
Some are already doing it:
Malengo has built an innovative financing model for East Africans from low-income and refugee backgrounds to move to Germany. They cover the full up-front costs of the worker, language training, visa, flights, etc., and then the worker pays them back later once he is earning above a certain threshold, a model called an income share agreement.
Velocity is pioneering online German language training in Africa to reduce the costs and time commitment for would-be learners.
Aedilo is pioneering ethical recruitment in the Gulf by refusing to collect or pay any unofficial fees.
But there are many more corridors to be opened up and plenty of infrastructure still to be built. Who’s going to help Malawians access jobs in Germany, or Ethiopians to work in hospitality in Greece? Who’s going to build the financing instruments that allow the lowest-income workers to overcome the initial costs and access these life-changing opportunities? Who’s going to provide the low-cost training infrastructure to help African workers learn German or Italian or Serbian?
This is not a small challenge, it is fundamental to the future of the global economy and could be transformational for millions of people. Each year 6.5m people migrate permanently to an OECD country and another 4.5m move on a temporary basis (roughly evenly split between temporary workers and international students).
Meanwhile, data for migrants flows to the Gulf is harder to come by; but based on a total stock of 35m foreign workers and assuming an average tenure of 8 years, then rough annual immigration is 4m workers. Currently, relatively few of these workers are from Sub-Saharan Africa (they made up only 5.3% of foreign workers in the last Saudi census).
In general, relatively few migrants come from the lowest-income backgrounds (and countries) that would benefit the most, particularly in Africa, because they face increased frictions and they don’t have the necessary resources to overcome the costs of migrating.
We think exceptional entrepreneurs are needed to take on this huge challenge, and build the labour migration companies that can benefit both the world’s poorest people and the countries they are moving to.
At Africa Jobs Fund we are building this next generation of labour mobility companies. We identify the highest-impact opportunities, find talented entrepreneurs to build them, provide them with seed capital, and then work hand-in-hand with them to get the company off the ground. It may not be a ‘sexy’ sector to focus on, but we believe this is one of the most effective ways to increase quality of life for low-income people in Africa at scale (check-out the appendix for a more detailed assessment of the cost-effectiveness).
If you’re excited about building the future of labour mobility then you can check out our website or apply to build with us.
Further Reading
And if you want to read more about international labour mobility then we recommend these articles as a starting point:
Literature on international labour mobility:
VoxDev Literature Review - International Migration (Dean Yang)
“International migration is one of the most powerful tools available for poverty reduction and economic development.”
Emigration as Growth Strategy (Charles Kenny - CGD)
“The evidence suggests that emigration is reliably associated with poverty reduction and investments in human capital [in the country of origin]”
The Least You Can Do for Global Poverty Is Better than the Best You Can Do (Lant Pritchett)
“The annual gain from a gold standard poverty program is roughly 1/40th the wage differential of low skill workers from these countries working in their country versus the USA”
Malengo:
What happens when you send Ugandan Students to German (Lauren Gilbert)
“Without Malengo, he likely wouldn’t have been able to attend university at all, let alone study in Europe. He told me that “you can’t picture someone like me being [able to study] in Germany.” He is incredibly cognizant of how lucky he is - he told me that “there might be people better than me but they don’t have this chance. I’m here representing the whole community of people who have dreams.”"
Malengo Evidence Update 2025 - Preliminary RCT Results (Johannes Haushofer and Richard Nerland)
The program is 28 times more effective than cash transfers in a baseline scenario, and 3,732 times in an optimistic scenario.
Cost-Effectiveness
If you want to better understand the cost-effectiveness of building new labour mobility companies then check-out this (highly-simplified) analysis that calculates the philanthropic subsidy required per year of doubled consumption created.
Our analyses suggest that Africa Jobs Fund can achieve multiples of the cost-effectiveness of GiveWell’s top recommended charities.
View the Spreadsheet here. Feel free to make a copy and play around with the numbers.
Great piece, and thanks for highlighting Velocity and Aedilo--I haven't heard of them before!
Fantastic project! On the Gulf: https://ideas.repec.org/a/gam/jecomi/v12y2024i6p134-d1404154.html "The facilities provided by the Government of the UAE were perceived to be considerably more favourable in comparison to those offered by the Government of India. The favourable view of the UAE authorities led to the choice of several migrant workers to remain there rather than return to India throughout the pandemic." Btw: I tried to donate but ran into many PayPal bugs ("Please try again later. We apologize for the inconvenience."). Is there another way?