Youth emigration need not be a net economic loss for small countries because some migrants return with money and experience, professor and 2019 Nobel laureate in economics Abhidžit Banerdži said. Returnees can establish businesses and employ other young people, while departures may reduce competition for jobs and raise wages for those who stay.
For Montenegro, his assessment places migration alongside other pressures on living standards: the costs of tourism growth, a changing labour market and access to social assistance. He cautioned that tourism’s benefits do not necessarily reach the people who bear its costs.
Migration and living standards
A significant share of migrants return after earning money, bringing capital and experience that they can put to work at home, in Banerdži’s view. Some may open private firms and hire younger workers. “The fact that young people leave does not mean they will not return,” he said.
Emigration can also change the position of workers who remain. To illustrate the effect of fewer people competing for a job, he contrasted facing 1 million other applicants with facing 500,000. With fewer people seeking work, those who stay may be able to earn more.
Young people often find large cities more exciting, but those cities are expensive and life there may be uncomfortable. Banerdži did not identify the destinations most common among people leaving Montenegro. He suggested that an average Montenegrin migrant might live in one room with three other people, in crowded conditions and with a low quality of life.
Any assessment of what young people gain by leaving should therefore consider quality of life, not only pay. Small countries without highly developed industries may still offer good living conditions. The possibility of return, together with the circumstances migrants face abroad, complicates the idea that every departure represents a permanent loss.
Tourism costs and benefits
Montenegro has exceptional tourism potential, in Banerdži’s assessment, but excessive construction and overuse of infrastructure are probably the sector’s biggest mistakes. Each additional visitor increases demand on infrastructure, contributes to road congestion and puts upward pressure on housing prices.
He pointed to Spain, Italy, Portugal and France as examples of countries where infrastructure and tourism capacity are overloaded, prices are rising and quality of life is declining. The effects of more visitors are not uniform: local sellers can gain customers and obtain better prices for their products.
Many middle-class residents, however, receive little direct benefit from tourism while still paying higher prices. That gap between those earning from visitors and those facing the costs is central to his warning about how the sector develops. The question from people who see no gain is, “What benefit do I get from this?”
Authorities should find ways to share tourism revenues with people who do not earn directly from the sector, including by investing part of the proceeds in education, Banerdži argued. Without a broader distribution of benefits, dissatisfaction and conflict can grow. He described reactions to unequal tourism gains in parts of southern Europe as somewhat racist.
Degrees and changing jobs
Higher education in transition economies no longer brings the same employment prospects it once did because far more people hold university degrees. In the previous generation, completing university led to a job; today, a degree does not guarantee one. Educated young people’s expectations often do not match the positions available.
Banerdži drew on his experience growing up in India, where many people want civil-service jobs. In his example, there is just one civil-service position for every 100 people. He also contrasted a time when 100 people held university degrees with today, when 10,000 do, making it impossible for everyone to obtain the same kind of job.
Education has value beyond entry to a particular occupation. An educated farmer, for example, may use available information more effectively and become more productive. That differs from treating a degree solely as a route to an expected position, an expectation that may no longer fit the labour market.
The effects of wider use of artificial intelligence on education and employment are not yet fully understood. People with only average education may find it much harder to get work, while education systems have not adapted to the changes the technology brings. More people now work in hospitality, restaurants and tourism than 30 years ago.
Education systems adjust slowly to changes in employment, as do parents’ expectations and the advice they give based on earlier conditions. The mismatch leaves young people pursuing qualifications with expectations that may not reflect the work available to them.
Barriers to social assistance
The evidence that social assistance discourages people from working is much weaker than is often assumed, in Banerdži’s assessment. In most countries he knows, insufficient assistance is a bigger problem than benefits deterring employment. He also sees too little clear evidence that another policy would produce better results.
Support is often inadequate, yet governments face pressure not to raise taxes because people and capital can move and for ideological reasons. He cited France as a country under budget pressure to cut social spending. In his view, it needs to increase taxes on wealthy people but is not doing so.
Banerdži said he does not know enough about Montenegro’s social assistance system to assess it. More generally, assistance does not always reach those who need it most, and application systems are often too complicated.
Research by J-PAL in Spain shows that many poor people do not apply for support to which they are entitled because the procedures are too complex. Poor people, those with limited literacy and migrants who do not speak the language well face particular difficulty accessing programmes.
Simplifying and combining social assistance systems would make it easier for people to receive help when they need it, Banerdži argued.
