What Is Emigration? Definition, Reasons, and Economic Impact

What Is Emigration?

Emigration is the relocation or process of people leaving one country to reside in another. People emigrate for many reasons, include increasing one's chance of employment or improving quality of life. Emigration affects the economies of the countries involved in both positive and negative ways, depending on the current state of the countries' economies.

Understanding Emigration

When people leave a country, they lower the nation's labor force and consumer spending. If the country they are leaving has an oversaturation of the labor force, this can result in the positive effect of relieving unemployment rates. On the other hand, the countries receiving the emigrants tend to benefit from more available workers, who also contribute to the economy by spending money.

While emigration usually represents people leaving a country, immigration is the process of a country receiving people who left another country. In other words, immigration is the result of emigration for the receiving country. For example, people might say they immigrated to the United States, which is where they now have permanent residence, but they emigrated from Spain. Many countries regulate the number of people that can emigrate or immigrate from one country to another.

In the United States, the number of people who emigrate and eventually become permanent residents are tracked and totaled by the U.S. Citizenship and Immigration Services (USCIS), which is part of the Department of Homeland Security (DHS). In Q4 2022, 286,000 noncitizens obtained lawful permanent residency status in the U.S. Approximately half of these entered the United States as new arrivals, with slightly more than half having had their status adjusted within the United States.

Fiscal Impact of Emigration

When people emigrate to a new country, they pay taxes in the new country based on earnings, property owned, and other factors. They may also pay sales tax on purchases when applicable. These people may also qualify for social services provided by that country, such as education for dependent children or universal health care. Each country needs to ensure new tax revenues match the additional expenses for social services provided to the emigrants and their families.

Remittances are funds sent by emigrants to their families or communities in their home countries. These financial inflows can provide a significant source of income for recipients and have a positive impact on the sending country's economy. Remittances can be used for various purposes, including daily expenses, education, healthcare, and investments in local businesses. This increased income can lead to improved living standards and reduced poverty in the sending country.

Some emigrants engage in circular migration where they move back and forth between their home country and host country. This can have different fiscal implications compared to permanent emigration. Circular migrants may contribute to both countries' economies intermittently, and they may have different needs and impacts on social services.

Effect of Emigration on Job Market and Wages

When large groups of emigrants enter the job market in a new country, there is an effect on the available number of jobs and the amount of wages one can ask for a particular job. The new country must have enough job openings to support emigration without damaging the chances of the native-born labor force finding employment. Additionally, if an emigrant takes a job for a lower wage than typically offered to the native labor force, it can lower wages for both emigrants and the native population.

The emigration of skilled workers can have a negative fiscal impact on the sending country. This is because the country invests in education and training of these individuals, and when they emigrate, the country loses the potential economic contributions and tax revenues from these skilled workers. This can hinder economic development and productivity growth in the sending country.

In some cases, emigration can alleviate pressure on the labor market in sending countries, leading to reduced unemployment and potentially boosting economic growth. When emigrants leave, there may be less competition for jobs which can lead to increased wages and improved working conditions for those who remain. This can result in increased tax revenues for the government as workers' incomes rise.

Rules for Emigration to the United States

The Immigration and Naturalization Act serves as the basis for emigration into the United States and allows for 675,000 permanent immigrants yearly. The country also provides emigration status to a certain number of refugees separate from this number. When choosing emigrants, the United States examines things such as family ties and unique job qualifications and creating diversification within the country. The goal of this Act is to protect the American economy by making positive additions to the workforce and maintaining a healthy job market for American citizens.

The U.S. immigration system emphasizes family unification, allowing U.S. citizens and legal permanent residents to sponsor certain family members for immigration. Immediate relatives of U.S. citizens, including spouses, unmarried minor children, and parents (if the petitioner is at least 21 years old) have unlimited visas available annually. Family preference visas are also offered but are subject to numerical limits.

The United States also offers multiple avenues for immigrants with valuable skills to come to the country, either on a temporary or permanent basis. These visas come with various eligibility criteria and limitations, often tying the worker to the petitioning employer. On the other hand, permanent immigration has an annual limit as well. The process involves labor market testing, certification by the Department of Labor, and filing petitions with USCIS in some cases.

Financial Reasons to Emigrate

Broadly speaking, there are many economic and financial reasons an individual may choose to emigrate. Note that there may be many non-financial reasons someone may emigrate but for the purpose of this section, we'll focus on the financial reasons. Those reasons may include:

• Seek Better Economic Opportunities: Many individuals seek emigration to access job markets with higher demand for their skills and expertise. This can lead to increased income potential and career advancement, ultimately improving their financial well-being.
• Avoid Poverty and Economic Hardship: In regions with limited economic opportunities and high poverty rates, emigration can offer a lifeline to escape destitution. People often leave in search of basic necessities like food, shelter, and healthcare.
• Send Remittances: Emigrants often work abroad to send money (remittances) back to their families in their home countries. These funds can cover essential expenses, such as education, healthcare, and housing, significantly improving the financial situation of their loved ones.
• Seek Better Cost of Living: High living costs in their home country, including housing, healthcare, and education, can lead individuals to seek more affordable destinations where their income goes further, allowing for savings or investments.
• Gain Access to Credit and Financial Services: Some countries lack developed financial systems, limiting access to credit, savings accounts, and investment opportunities. Emigrants may move to access better financial services and save or invest more effectively.
• Pursue Better Education (at Better Costs): Parents may emigrate to countries with lower education costs, enabling their children to access quality education without incurring excessive debt, which can have long-term financial benefits.
• Escape from Economic Discrimination: Economic discrimination based on factors like ethnicity, religion, or gender can limit economic prospects in the home country. Emigration offers the opportunity to escape such constraints and pursue financial success on a more equal footing.
  

The Bottom Line

Emigration refers to the process of leaving one's home country to settle in another nation. It's often driven by factors such as economic opportunities, political instability, or personal aspirations. It can have diverse economic impacts, including remittance flows, brain drain effects, and contributions to both sending and receiving countries' economies.