Afghanistan’s economic prospects are dimand its growth options limited. This puts pressure on thelabor market, with 400,000 new entrants joining the laborforce annually. As in the past, this will likely lead tomostly illegal emigration with limited employment prospectsand wages in neighboring countries (Pakistan, Iran) andbeyond. This is unfortunate given Afghanistan’s geographicproximity to the world’s third largest migration destinationregion behind North America and Europe: the countries of theGulf Coordination Council (GCC). For some time now, variousAsian countries have used managed labor migration as a meansto secure temporary and legal jobs for their surplus labor,garnering higher wages and opportunities to transfer incomeback to their families, save for future investments, andgain work experience and higher skills. Managed labormigration based on well-designed bilateral labor agreementsthat reflect the objectives of both the labor-sending andlabor-receiving country could open opportunities forAfghanistan in GCC countries and even in higher wage labormarkets, provided that adequate labor-sending systems are inplace. This paper explores the use of managed labormigration as an instrument for employment for the Afghanlabor force and for economic growth. It investigates thesupply of and demand side for managed migration flows,estimates the impact on the volume of remittances sent back,and examines the possible impact of formal labor migrationopportunities on skills formation of migrants and of thelabor force remaining home. These quantitative profiles ofremittances and skills are explored with acountry-calibrated computable general equilibrium model toestimate the impact on output, economic growth, and otherrelevant economic outcomes; they may trigger policy actionto make managed labor migration a reality in Afghanistan.
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