3.4.3.2   The Economic Impact of Job Losses and Emigration

Job losses and emigration cause an economy to shrink and can destabilise it; this is a challenge which needs careful management.

In some places, the local economy is unable to provide sufficient jobs for the population, as described in the previous sub-section (3.4.3.1).  People may wish to migrate to a place where they can find jobs, but their emigration has adverse economic consequences for the region that they are leaving:

·      Other businesses in the area will thereby lose customers, and this may further increase the job losses. 

·      Governments lose tax revenue when jobs are lost.  They receive less tax from businesses and from their employees.  This can have a detrimental impact on public services and/or result in higher taxes elsewhere in the economy.

·      There might be an associated dip in property prices, due to reduced demand for housing.  A reduction in property prices is beneficial for first-time buyers, but it has a dampening effect on the economy as a whole: it reduces people's wealth, their ability to borrow more money and hence their appetite for consumer spending.

·      People of working age may have scarce skills.  If they leave a country in search of a better life, they take their skills with them.

·      A country’s economic capacity is reduced if it loses people of working age.  This might not be a serious problem however, if it is unable to employ them gainfully.

For some poorer economies, though, there is a positive aspect to emigration: money sent back home by migrants can be beneficial.  For example, “In 2022, the personal remittances received as share of the gross domestic product in the Philippines remained nearly unchanged at around 9.41 percent” according to Statista.com.  And those who leave may benefit the region they go to – as described in the next sub-section (3.4.3.3).

If people choose to stay in an area despite a shortage of work, perhaps for family reasons, they may become a drag on the economy: requiring unemployment benefits for example.  If globalisation has caused job losses in a particular area (3.4.2), it may also have made the country as a whole wealthier and more able to pay for the unemployment benefits.

Unemployment is also a political problem, causing dissatisfaction with the government, so politicians sometimes resort to tactical economic interventions (3.3.7.1) to protect local businesses and avoid job losses – even though this may harm the economy as a whole.  As discussed later, though, some kind of political response is essential (6.7.8).

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(This is an archive of a page intended to form part of Edition 4 of the Patterns of Power series of books.  The latest versions are at book contents).