Economic Impacts of Circular and Permanent Migration: The Malaysia – Indonesia Migration Corridor Example

There are a few empirical studies that look at the relative economic impacts of circular and permanent migration of the low-skilled workers. Data gathered from 858 Indonesian low skilled migrant workers in Peninsular Malaysia with varying legal statuses (documented, undocumented and permanent residents) and mobility intentions (circular, permanent or undecided) were used to analyse the impacts.
All circular migrants remitted more and used their remittances for more than just consumption related activities than permanent migrants. As suggested by Glytsos (1997, p. 421), circular migrants, by sending a larger proportion of their wages, indicated a preference for consumption at the home country. Their remittances are used for activities with higher multiplying effects with investment in education of children and savings, while the permanent migrants’ smaller remittances often supported the extended family members left behind with day-to-day expenses. The undecided migrants’ use of remittances was similar to that of circular migrants.
It is evident from the study that the positive economic benefits for Indonesia, Malaysia and the individual migrant continue to facilitate the migration flow.