The Effect of Low-Skilled Labor Migration on the Host Economy

{
  "authors": [
    "Uri Dadush"
  ],
  "type": "other",
  "centerAffiliationAll": "",
  "centers": [
    "Carnegie Endowment for International Peace"
  ],
  "collections": [],
  "englishNewsletterAll": "",
  "nonEnglishNewsletterAll": "",
  "primaryCenter": "Carnegie Endowment for International Peace",
  "programAffiliation": "",
  "programs": [],
  "projects": [],
  "regions": [
    "North America",
    "United States",
    "Middle East",
    "North Africa",
    "Western Europe"
  ],
  "topics": [
    "Economy"
  ]
}

Other

The Effect of Low-Skilled Labor Migration on the Host Economy

Migration of low-skilled workers into advanced countries remains a highly contentious issue, despite high demand for such workers to carry out a range of essential tasks, especially services.

By Uri Dadush

Published on Apr 30, 2014

Source: Knomad Working Paper

Migration of low-skilled workers into advanced countries remains a highly contentious issue, despite high demand for such workers to carry out a range of essential tasks, especially services. This systematic survey of the empirical literature on the effect of low-skilled migration on host countries suggests that fears of an adverse impact on the wages, unemployment and living standards of native low-skilled workers are largely misplaced, while the positive effects on the broad economy are significant and typically underestimated. The empirical literature is underpinned by a robust theoretical framework which suggests that migration will spur investment, induce task specialization of natives and, under certain plausible conditions, ultimately raise the demand for all workers. Host countries should recognize that they need low-skilled migrants and adjust their policies accordingly. Because migrants respond to demand, opening up new avenues for legal migration of low-skilled workers need not necessarily result in increased total immigration provided they are combined with enforcement of labor regulations among employers.

This paper was originally published by the World Bank-led Knomad partnership on migration.

Read Full Text

About the Author

Uri Dadush

Former Senior Associate, International Economics Program

Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.

Recent Work

Commentary
The Labors of Tsipras
- Uri Dadush
In The Media
Greece, Complacency, and the Euro
- Uri Dadush

Economy North America United States Middle East North Africa Western Europe

Carnegie India does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

More Work from Carnegie India

Commentary
India Signs the Pax Silica—A Counter to Pax Sinica?
On the last day of the India AI Impact Summit, India signed Pax Silica, a U.S.-led declaration seemingly focused on semiconductors. While India’s accession to the same was not entirely unforeseen, becoming a signatory nation this quickly was not on the cards either.
Konark Bhandari
Commentary
The Impact of U.S. Sanctions and Tariffs on India’s Russian Oil Imports
This piece examines India’s response to U.S. sanctions and tariffs, specifically assessing the immediate market consequences, such as alterations in import costs, and the broader strategic implications for India’s energy security and foreign policy orientation.
Vrinda Sahai
Paper
India-China Economic Ties: Determinants and Possibilities
This paper examines the evolution of India-China economic ties from 2005 to 2025. It explores the impact of global events, bilateral political ties, and domestic policies on distinct spheres of the economic relationship.
Santosh Pai
Commentary
NISAR Soars While India-U.S. Tariff Tensions Simmer
On July 30, 2025, the United States announced 25 percent tariffs on Indian goods. While diplomatic tensions simmered on the trade front, a cosmic calm prevailed at the Sriharikota launch range. Officials from NASA and ISRO were preparing to launch an engineering marvel into space—the NASA-ISRO Synthetic Aperture Radar (NISAR), marking a significant milestone in the India-U.S. bilateral partnership.
Tejas Bharadwaj
Commentary
TRUST and Tariffs
The India-U.S. relationship currently appears buffeted between three “Ts”—TRUST, Tariffs, and Trump.
Arun K. Singh

More Work from Carnegie India

Commentary

India Signs the Pax Silica—A Counter to Pax Sinica?

On the last day of the India AI Impact Summit, India signed Pax Silica, a U.S.-led declaration seemingly focused on semiconductors. While India’s accession to the same was not entirely unforeseen, becoming a signatory nation this quickly was not on the cards either.

Konark Bhandari

Commentary

The Impact of U.S. Sanctions and Tariffs on India’s Russian Oil Imports

This piece examines India’s response to U.S. sanctions and tariffs, specifically assessing the immediate market consequences, such as alterations in import costs, and the broader strategic implications for India’s energy security and foreign policy orientation.

Vrinda Sahai

Paper

India-China Economic Ties: Determinants and Possibilities

This paper examines the evolution of India-China economic ties from 2005 to 2025. It explores the impact of global events, bilateral political ties, and domestic policies on distinct spheres of the economic relationship.

Santosh Pai

Commentary

NISAR Soars While India-U.S. Tariff Tensions Simmer

On July 30, 2025, the United States announced 25 percent tariffs on Indian goods. While diplomatic tensions simmered on the trade front, a cosmic calm prevailed at the Sriharikota launch range. Officials from NASA and ISRO were preparing to launch an engineering marvel into space—the NASA-ISRO Synthetic Aperture Radar (NISAR), marking a significant milestone in the India-U.S. bilateral partnership.

Tejas Bharadwaj

Commentary

TRUST and Tariffs

The India-U.S. relationship currently appears buffeted between three “Ts”—TRUST, Tariffs, and Trump.

Arun K. Singh