Remittances, Income Inequality, and Brain Drain: An Empirical Investigation for the MENA Region

Part C of the UN’s 10th Sustainable Development Goal to reduce inequity addresses the migration policies (target 7), including the migration of the less-skilled migrant workers. Scholars on brain drain suggest that migration of the high skilled leads to serious social losses for those left behind, which also contributes to an increase in inequality. Furthermore, unskilled migrants are likely to stay less but to remit more and on a frequent basis compared with their skilled compatriots. This chapter relies on this literature with a focus on MENA region. The research builds on the lack of previous empirical evidence and provides consideration to the impact of low-skilled migrants as a conditional factor in making remittances to be sent to the lowest deciles of the income distribution. Using the instrument variable technique, results show that the increase in the number of unskilled migrants compared with the number of skilled stimulates high volume of remittance operations to be channeled to low-income families, which reduces income inequality in the home country. These insights reveal that migrant remittances can stimulate economic development, but success relies on reducing the level of brain drain and initiatives to facilitate less-skilled migration.