15 While the results on the effects on overall job creation and growth remain so far inconclusive, at the micro-level remittances are found to reduce poverty and increase spending on education and health (especially among the better-off households) as well as housing (UNDP, 2009; World Bank, 2011). They also provide livelihood and insurance strategies in the event of sudden shocks and slow-onset disasters, substituting for less efficient financial systems both in terms of ex post responses to disasters and in terms of ex ante risk management strategy (Bettin and Zazzaro, 2017).

Over one-fifth of high-skilled workers from low-income countries, and over 40 percent of those from small island nations have migrated to high-income countries (Artuc, et al., 2015). But remittances, spillovers from return migration (brain circulation) and increased domestic demand for higher education help offset the loss, often resulting in a “brain gain” (Mattoo, Neagu, and Özden, 2008). On balance, the effects for the sending areas are considered quite positive (World Bank, 2016b provides a review).

This does not mean, however, that there are no losers. The welfare and labor market effects of internal migration on the households and communities of origin, and how these could be improved, has received less attention (China being a noteworthy exception). The same holds for the effects on the communities of origin of forced migration in response to conflict. Therefore, it remains important to better understand and address the effects of jobs externalities on local investments and job opportunities. As discussed above, when jobs externalities are not taken into consideration by the private sector local investments, the number and distribution of jobs, can be below socially efficient levels. The loss of human capital (particularly skilled workers) adds to this problem by constraining fiscal expenditures given forgone tax revenues, further reducing investment opportunities, and depressing private rates of return. The solution is not to stop or regulate migration but, instead, to build on the opportunities that migration creates to promote local investments and job creation. Not doing so would not only be a missing opportunity to promote local economic development and improve job opportunities for those who stay behind,<sup>32</sup> it can also lead to an increase in inequality in the sending areas,<sup>33</sup> and in some cases, macro-economic imbalances such as the Dutch disease.

The suggestion therefore is to coordinate/integrate migration policies with local jobs strategies. A critical aspect would be to improve the management of remittances to further reduce the cost of remitting and to enhance their development impact by increasing fiscal revenues (for the production of local public goods), promoting financial innovation, and creating linkages to local investment opportunities and job creation. To this end it would be necessary to revamp local active labor market programs (including training) and to develop “demand-side” interventions such as value chain development and entrepreneurship programs (Datta et al., 2018) that aim to equate private and social rates of return on investments (Robalino, Romero and Walker, 2019). It would also be important to better coordinate skilled outmigration between sending and receiving countries, including for example through co-investment in education (see Box 1).

> 32 Those staying behind also face psycho-emotional costs that are often not considered in welfare analysis of migration.

> 33 With better-off households more likely to send migrants abroad (UNDP, 2009), and migrants from better-off households more likely to be successful and send remittances, remittances may further concentrate resources in the hands of the better-off. This might hold, in general, but also in the context of disaster, thereby reproducing the inequalities and vulnerabilities existing within the community of origin (Le De, Gaillard and Friesen, 2013; 2015a, b).