A comprehensive example of migration’s positive and negative economic effects on both sending and receiving countries is that of Philippine nurses who have migrated to the United States. With the developed world experiencing severe nursing shortages, U.S. hospitals have found a deep pool of experienced nurses in the Philippines. Offering higher salaries and better living standards, U.S. hospitals have had little trouble luring Philippine nurses from their home country.
In fact, in many hospitals these immigrants make up the majority of the nursing staff. Philippine nurses have become such an integral part of the American health system that they have started their own national organization, the Philippine Nurses Association of America. The Philippine nurses example thus displays the entire phenomenon of migration and its economic consequences.
For example, as noted, receiving countries can gain from migration when there is a shortage in domestic labor supply. The United States and other industrialized countries started to experience nursing shortages in the 1970s, as more work opportunities began to open to women—making nursing, with its long hours and high stress, a less appealing option. But well-educated and English-speaking Philippine nurses provided the perfect replacement workforce. Without increasing wages, U.S. hospitals were able to fill necessary, but unwanted, jobs with Philippine immigrants.
At the same time, the migration of the nurses has positive economic effects in the Philippines. Once employed in the United States, the nurses can earn as much as 20 times what they were making back home. Part of this money they send home to support family and other dependents. As noted earlier, this is called a remittance. The remittances flowing back into the country from the migrant nurses help boost the Philippine economy and support the local population. Remittances have become so important for the Philippines that the country once had a program that required the nurses to remit a fixed proportion of their wages, although the program was eventually abandoned as being unenforceable.
On top of remittances, if and when the migrant nurses return to the Philippines they will bring with them greater amounts of training and experience contributing to social capital. The government has reacted to the potential benefits from emigration by sponsoring initiatives to ease the process. In 1982, for example, the government created a whole new department, the Philippine Overseas Employment Agency, responsible for optimizing the benefits of the country’s overseas employment program. The Philippine National Bank has also reacted with programs that encourage remittance flows, and special remittance centers have been created in various parts of the United States.
Of course, there are negative effects as well. When the Philippine nurses come to America they leave behind nursing shortages in their home country. The Philippines is losing one of its greatest sources of social capital-educated workers. In other words, the Philippines is experiencing brain-drain. Moreover, the benefits of government expenditures on education are not coming to bear in the Philippines but rather in the United States. Furthermore, turnover at Philippine hospitals is so high that even operating rooms are staffed with novice nurses.
There is also some negative economic effect on the United States. On the one hand, the jobs they are taking would not necessarily have been filled by domestic laborers. On the other hand, American nurses see their salaries decrease as Philippine nurses arrive and are willing to work for lower wages. In order to obtain visas for the incoming Philippine nurses, U.S. hospitals must prove that they are unable to fill their existing vacancies with American nurses. Thus, it may appear that the jobs are going unfilled.
However, it may be that the reason hospitals are unable to fill these vacancies with local help is because the wages they are offering are too low. Why are the wages so low? Because hospitals know they can find foreign nurses who are willing to accept them.
Since the Economic Crisis (2007 – 2009), there are fewer nursing jobs available throughout the developed world for Philippine nurses. The U.S. and Europe passed strict visa requirements that restrict Philippine nurses. In the Philippines, nursing schools are making it more difficult to get it to discourage enrollment. Now, only about half the applicants pass the entrance exams. The government encourages students to pursue other related careers in medical technology and pharmacology. Nurses are also encouraged to find jobs in call centers for medical related companies (McGeown, 2012).
The Philippine nurses’ example thus shows the varying features of labor migration and the problems with analyzing its effects. The receiving country, the United States, gains because it fills a labor demand. The sending country, the Philippines, gain originally because migrants who are able to get better paying jobs in other countries were still able to help their home country by sending money back home. The Philippines lost social capital and wasted investment in its citizens when large-scale emigration occurred. Now the country is trying to encourage would-be nursing students to pursue other careers which are in demand.
Is it responsible policy for the United States to recruit nurses and for the government of the Philippines to encourage emigration when these educated laborers are needed to build up their home country? Is it fair to nurses in the United States, whose wages may be depressed by the competition?