An important dimension yet to be clearly assessed by the World Bank is the impact of remittances from the perspective of source countries, as it is transmitted through official as well as unofficial channels. However, remittances are a prominent income source and boost the economic development. Another problem is the migration of highly skilled labour force which is popularly termed as brain drain for thecountries of the migrants and brain gain in the recipient countries.The labour markets of source countries have diminished because of emigration, and countries with small population have experienced a drag of skilled labour towards developed economy. For instances, population of Georgia and Armenia have shortened by 27%and 15% respectively despite a positive population growth soon after the collapse of Soviet Union.
On account of emigration of the relative wage level and inequality is also affected as the economy size reduces. A 2-5 percent rise in wages takes place if a 10 percent supplyshortage of emigrants occurs according to recent studies done at the national level (Mishra, 2014). But this effect clearly depended on the level of skills of the migrants. For example if the education of migrants is high then wage then the difference between low and high-skilled labourincreases. The reverse would be positive if the migrants are not very skilled.
Emigration has resulted in the loss of human capital in many source countries over the years. Migration of highly skilled labour has adversely affected the source countries that causes brain drain (Oecd, 2013). The reasons for migration of highly skilled labour stems from the fact that high initial resources are needed for migration. Moreover better compensation and pulling immigration policies of the recipient countries are favourable for skilled labour. This acts as a pull factor in attracting the highly skilled labour. Productivity growth is also negatively affected as educated migrant transfer know-how of technology of source countries to the recipient countries. It was also cited in evidences derived from studies that the benefits gained from remittances can be potentially mitigated by these losses (Mishra, 2014).