Migration, Production and Technological Change

The relationship between migration, technological change and production in areas of out-migration can be considered in the context of two conflicting hypotheses. The first is that out-migration stimulates development of origin areas, in so far as it generates remittances and induces technological change which results in higher output and incomes. The contrary hypothesis is that out-migration leads to a shortage of labour and a decline in the average “quality” of labour force in the origin areas, which adversely affect output and productivity. The reduced supply of labour is also likely to push up wage rates in origin areas and encourage labour-saving technological change.