Bilateral Guest Worker Agreements: A win-win solution for rich countries and poor people in the developing world

April 25, 2007
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Increased labor mobility holds potentially huge gains for the developing and developed world. If rich countries were to permit a mere 3 percent increase in the size of their labor force by easing restrictions on labor mobility, the benefits to citizens of poor countries would be $305 billion a year--almost twice the combined annual benefits of full trade liberalization, foreign aid and debt relief. But increased migration is notoriously unpopular. Rich country citizens have legitimate concerns about the impact of low-skill migrant workers on public services, possible security risks, implications for existing low-income workers, and potential cultural impacts.

In this CGD Brief, non-resident fellow Lant Pritchett lays out a solution that is beneficial to poor people and potentially politically acceptable to rich country voters: temporary legal work programs negotiated bilaterally, wherein rich countries take responsibility for certifying labor shortages in specific industries and labor-sending countries take responsibility for ensuring that temporary workers actually return home.

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