Emigration and External Imbalances in Sub-Saharan Africa: Do Migrants' Skills Matter?

Abstract

Abstract The external deficits in SSA countries are a major concern and may be connected to emigration from these countries to advanced economies. According to the life cycle theory, by decreasing labour force, emigration induces a fall in savings and a deterioration in the external balance in the countries of origin. Migrants' remittances may dampen or even counterbalance this effect, depending on migrants' skills that matter for their propensity to remit. Empirical investigation for SSA countries over the period 1990–2014 shows that low-skilled emigration improves the current account balance, whereas high-skilled emigration worsens it because highly skilled emigrants have higher saving potential but tend to remit less than low-skilled ones. Therefore, incentives for the financing of home economies by skilled migrants would be beneficial.