Introduction

In crisis events, immigrant workers are among the hardest hit and most vulnerable to displacement, unemployment, and income loss. This work highlights the understudied aspect of repatriation, which the present data analysis unpacks. Conflicts, social unrest, natural disasters and economic crises are considered immigration disruptions to regular labor immigration patterns (Bylander 2018), with the pandemic being no different from a natural disruptor (Liao 2020). Human mobility restrictions in response to COVID-19 created disorder among immigrants (Dommaraju 2020). Expatriates have been associated with executive assignments (Borrmann 1968; Negandhi & Estafen, 1965). Immigrant workers faced adverse impacts, such as long working hours, isolation, poor quality of living standards, social discrimination, and mental pressures. Their dependents at home faced financial strains due to reduced cash flow from their working relatives. Moreover, immigrant workers were in constant fear of being sent back to their home countries due to the impact of COVID-19 in their host countries (Karim et al., 2020). To curb COVID-19 transmission, most countries where immigrant workers work enforced lockdowns, which reduced working hours and job opportunities. Previous research suggested that expatriates were satisfied only when their international assignment or travel included options for career development, job enrichment and the presence of a supportive family (Kim & Tung, 2013), and relocation was motivated by financial reasons (Lett & Smith, 2009).

With these prospects gone due to the pandemic, the environment where employees were assigned became seriously adverse, if not hostile. In the past, countries saw the positive effects of immigration in boosting economic prosperity in the host country (Morley 2006), skill endowment and productivity (Borjas 1994). Since there is a lack of consensus on how expatriates should be defined, the conception of McNulty and Brewster (2017) was used. They critically conceptualized expatriates as international business travelers (IBTs) and commuters, virtual workers, assigned employees, self-initiated labor seekers, migrants (skilled and unskilled), and sojourners (retirees and students). The present study draws attention to Oman, a Persian Gulf country, and explores some early effects of reverse immigration. Looking at expatriate data that include what such definitions tend to capture, the study finds that despite reverse effects, these are definite differences between ethnic groups. This suggests that possible reverse effects in immigratory flows (often induced by exogenous shocks) should not be examined only in the aggregate. Expatriate populations manifest different dynamics depending on their ethnic background, social networks or even bilateral agreements between countries.

The Aspirations-Capabilities framework aspires to capture how macroeconomic factors influence ideas (e.g., expectations) and resources (e.g., financial or human) conducive to the decision to migrate or not. For the first time in the English language literature, the study investigates a set of hypotheses to test the Aspirations-Capabilities framework and whether this hypothesis survives the robustness of the pandemic exogenous shock. The analysis explores whether the COVID-19 pandemic shock negatively impacts expatriates in the host country, as well as identifies heterogeneous effects across different ethnic groups. The focus on Oman deviates from prior research focused solely on a source country and a host country, where the major concern is the reason individuals choose to migrate from a less developed to a more developed country (Karemera et al., 2000; Serlenga & Shin, 2021). Instead, the focus is on the exogenous effect of the COVID-19 shock on ethnic expatriates in the host country.

The Case of Oman

During the COVID-19 pandemic in Oman,Footnote 1 the employment rate for natives and expatriates declined. Specifically, the number of expatriates in Oman dramatically declined (Fig. 1). Governments in the Persian Gulf considered existing immigration levels as already too high and expressed the desire to lower them by restricting the inflows of expatriates competing with nationals (Al-Ali 2008).

Fig. 1
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The total number of expatriates in Oman from February 2013 until February 2021. Data source: Datastream database (Thomson Reuters, 2022)

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The oil revenue euphoria of the 1960s and 1970s began in Oman with ambitious development projects that necessitated the availability of a skilled workforce, which Oman did not have and needed to attract. Foreign workers transformed the oil and gas sector’s infrastructure and local labor needs. Omanisation falls under labor localization, where recruitment and development of local labor aim to reduce dependence upon expatriate flows (Waxin & Bateman, 2016).Footnote 2 However, these localization programs were unsuccessful as businesses struggled to conform (Ryan 2016). Ministerial statements about the need for indigenization of the labor force increased as unemployment among nationals increased (Barrington & Lewis, 2021; Musalmy 2021). The immigration flow of expatriates in the Persian Gulf region is not a new phenomenon (Haak-Saheem & Brewster, 2017). The countries successfully attracted foreign direct investments and specialized talent via the international labor market, forming local organizational hierarchies where locals ran the companies. A high number of blue-collar workers were from Asia. The main countries sending immigrants to the Persian Gulf included India, Pakistan, Bangladesh, the Philippines, Sri Lanka, and Indonesia. For many of these countries, immigration to the Persian Gulf became the only solution to fight low economic development and pressure for jobs for new entrants.

The majority of employees in the private sector are foreign expatriates, while the public sector remained the prime employer of nationals across the Persian Gulf states (Al-Waqfi & Forstenlechner, 2014). Many expatriates are mainly economically driven, following attractive salary packages and no income tax. They left their countries to escape unemployment, while their families at home depended on annual remittance transfers.

The government of Oman initiated an operation known as Omanisation (Ministry of Endowment and Religious Affairs 2022), which allotted subsidies to companies for replacing expatriates with trained Omanis. It initially started in 1988 and took effect under the first Omanisation laws in 1994 passed by the Ministry of Social Affairs and Labor. The laws imposed quotas on nationals in various private sectors (Mashood et al., 2009). In 1997 a monitoring committee was formed and put in charge of implementing the quotas. Companies that achieved their quotas were awarded a green card, which gave them access to preferential treatment by the Ministry. Despite governmental efforts, the most deterring obstacles to Omanisation in the private sector were low compensation, limited benefits, and lack of awareness of employment opportunities (Al-Lamki 1998). Most prospective Omani employees are unhappy with private sector salaries, retirement plans, social security, and educational assistance. In addition, vacations are limited, sick leave is restricted, and they have to work long hours.

Expatriate Theory

Thus far, the literature on migration has focused on people who migrate, with prominent scholars calling for an age of migration (Castles et al., 2014), and people who choose to stay (Schewel 2020). De Haas (2021) reframed the arising dichotomy that migratory agency (moving or staying) is the ability to choose where to stay and is called the Aspirations-Capabilities framework. An attempt to integrate current knowledge splits into acquiescent preferences and the ability to move through constraints, which can be political (Massey et al., 1993) or related to financial constraints (Van Hear 2014), which can be hazardous for household survival strategies that attempt to minimize associated economic risks and enhance capital accumulation. Social networks reduce the economic and psychological costs of making the trip and build transnational communities (Boyd 1989; Hagan 1998), often demanding recurrent trips (Parrado & Cerrutti, 2003). Immigration decisions are not made in isolation by individual actors but by larger units (households) that collectively maximize income and minimize the risk associated with market failures in the source country (Katz & Stark, 1986; Stark & Bloom, 1985; Stark & Levhari, 1982). Risk diversification is applied when economic conditions deteriorate in the home country, and immigrant remittances in the host country upport households back in the immigrants’ home country. Push and pull models of immigration have been criticized for overlooking intangible elements of individuals’ expectations. Fischer and Malmberg (2001) reported that settled people do not move, while risk can change the prospects of staying at home or moving elsewhere (Czaika 2015).

This paper tests the capability hypothesis of the Aspirations-Capability framework on immigration. Unemployment is by itself a factor of mobility and immobility, suggesting that immigration is caused by a geographic difference in the supply and demand of labor, thus causing workers to move. The literature has explored the factors that motivate individuals to move from low-wage to high-wage countries (Harris & Todaro, 1970; Todaro 1969). At the same time, higher earnings or job opportunities in origin countries are accompanied by declines in the propensity to emigrate. Immigration is a costly move (Lewis 1954; Ravenstein 1885), and only an increase in income in the origin country will reduce immigration (Roy 1951; Borjas 1987). With COVID-19 making the cost to move very high, these flows declined and reversed as foreign worker demand evaporated.

The model of Borjas (1989) and the survey by Greenwood (1975) suggest that the choice of a country for immigration purposes depends on the host country’s characteristics. Karemera et al. (2000) found that migration is negatively related to unemployment (or positively to employment) in the destination country. The country’s destination income is negatively related to immigration (Clark et al., 2007), while high country risks and conflicts can positively affect migration (Docquier 2018). Bylander (2018) and Dommaraju (2020) articulated that pandemics act as shocks, causing disruptions in migratory flows. It can be assumed the COVID-19 pandemic will exert similar shocks on intentions to stay. Thus, the following hypothesis is tested:

  • H1: The COVID-19 pandemic has a negative effect on expatriate levels in the host country.

It is also interesting to see how the Aspirations-Capabilities framework is universal and persists in testing multiculturalism or different ethnic minorities in the host country. For receiving countries, immigration most certainly would lead to the settlement or formation of ethnic communities due to the social nature of the migration process (Castles 2000). However, immigrants arrive from different cultural backgrounds, carry with them different traditions, and speak different languages. Cultural diversity does not necessarily indicate equality between ethnic groups, and certain groups might benefit over others (Castles 2002). Thus, it is hypothesized that ethnic groups may vary in how they are affected by a pandemic shock in their host country.

  • H2: The COVID-19 pandemic positively affects expatriate levels in every ethnic group in the host country.

Migration Determinants

Researchers suggest that economic growth per worker is higher in economies more open to international immigration (Chen & Fang, 2013). Studying the nexus between immigration and growth and how ethnic immigration affects the economic performance of destination countries has been a very active research topic (Ager & Brückner, 2013; Alesina & Ferrara, 2005; Bove & Elia, 2017; De Haan 1999; Gören 2014). The link between economic growth and immigration has not only been studied for host countries but also for source countries, often linked with the positive effects of the brain drain (Chen 2006; Mountford 1997; Rodriguez 1975). To this end, this variable is a valuable addition to the estimation model. The underlying idea is a boost to labor productivity, making businesses or countries more competitive in the international markets.

  • H3: Higher production positively affects expatriate levels in the host country.

Apart from the growth effects, inflation usually reduces wages as the labor pool increases and employers have more options to choose from. Immigration coupled with the host country’s labor supply elasticity can put downward pressure on inflation (thus flattening the Phillips curve), a channel introduced by Bentolila et al. (2008). Furlanetto and Robstad (2019) studied the effects of immigration in Norway which positively impact inflation because of the exchange rate depreciation due to remittances. Lach (2007) found that immigrants in Israel reduce product prices due to the increased aggregate demand, higher price elasticities and lower search costs compared to natives. Cortes (2008) posited that the decrease in the prices of goods and services can be attributed to immigrant orientation to low-valued aggregate demand.

  • H4: Inflation positively affects expatriate levels in the host country.

In addition to growth and inflation, employment was also considered. In economic theory, immigrants are generally motivated by the returns (or opportunities) expected in their decision to move. Individuals choose to immigrate if the present value of the expected benefits exceeds the move’s accrued costs (Pessino 1991; Sjaastad 1962). The higher the unemployment rate, the more intensified the search process becomes for individuals to immigrate (DaVanzo 1978; Di Pietro 2005; Goss & Schoening, 1984; Karemera et al., 2000). The decision to immigrate is governed by the income differential between the home and host destinations (Harris & Todaro, 1970; Pissarides & McMaster, 1990; Todaro 1969), where immigrants can access employment opportunities through the small business sector (Barrett & Burgess, 2008). Immigrant workers offer employers flexibility as immigrants often work longer hours than domestic workers (Lee 1999).

  • H5: Higher employment has a positive effect on expatriate levels in the host country.

Immigrants are also faced with economic shocks and are the first who are pushed to move as they are constantly searching for stability (Ramos 2020; Weiner 1992). Conflict, instability, and environmental degradation continue to displace immigrants from their home countries, searching for regional stability (Widgren 1990). At times of political and economic uncertainty, immigrants desire stability and settlement for themselves and their families (Pratsinakis et al., 2020).

  • H6: Higher political stability has a positive effect on expatriate levels in the host country.

Data and Methodology

The data were obtained from the Datastream database (Thomson Reuters 2022), a subscription data-sharing portal, which provided access to Oman’s Sultanate data. The data cover the period from February 2013 to February 2021. In terms of the modelling approach, the following equation serves the empirical goal of the paper:

$$ \log \left({Expatriates}_t\right)=a+{\beta}_1\log \left({Y}_t\right)+{\beta}_2\log \left({P}_t\right)+{\beta}_3\log \left({Riskability}_t\right)+{\beta}_4(DCOVID19)+{\varepsilon}_t $$
(1)

where a is the constant term, Yt denotes a real-economy variable, such as industrial production or employment, Pt is the consumer price index, Riskabilityt is an index measuring the country’s political stability, and DCOVID19 is a dummy variable that equals one during the pandemic period and zero otherwise. The empirical analysis provides estimates relevant to the β4 coefficient that identifies the pandemic event’s impact on the expatriates in Oman. The explanatory variables are employment, inflation, industrial production and stability risk. Table 1 reports specific summary statistics. Figure 2 depicts the model with all the tested hypotheses.

Table 1 Summary statistics for February 2013 to February 2021; N = 97
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Fig. 2
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Hypotheses tested

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Empirical Results

First, the empirical analysis investigated the presence of stationarity across all variables included in Eq. (1). Table 2 reports the generalized least squares (GLS) test, recommended by Elliott et al. (1996), which illustrates the presence of a unit root in levels across all variables under consideration. The unit root disappears when first differences are considered.

Table 2 GLS unit root test & Zivot-Andrews unit root test with a structural break: February 2013 to February 2021, N = 97
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The GLS test may provide biased and spurious results due to the absence of information about structural breakpoints in the series. Therefore, the Zivot and Andrews (2002) test was applied. They consider a model that tests the stationarity properties of the variables in the presence of a structural breakpoint when there is a one-time change in the intercept and the trend of the variables under study. The null hypothesis of the unit root break date indicates that the series is not stationary. The test fixes all points as having the potential for time breaks and provides an estimation through regression analysis for all possible breakpoints successively. All the series show a unit root at their level, integrated at one (I(1)) (Table 2). Thus, the series is stationary in first differences. Simultaneously, the breakpoint coincides with April 2020, the month when Oman experienced an important increase in COVID-19 confirmed cases. Hence, for the purpose of the regression analysis, a dummy variable (DCOVID19) was explicitly introduced that takes the value of one from April 2020 to September 2020 and zero otherwise.

Table 3 reports the ordinary least squares (OLS) and instrumental variable (IV) estimation results using both industrial production and employment as alternative controls (Panels A and B, respectively). Simultaneously, the dependent variable is total expatriates, and all variables (except the dummy) are expressed in logarithms.

Table 3 OLS & IV estimates: Total expatriates, February 2013 to February 2021, N = 97
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Focusing on the primary driver, DCOVID19, the results suggest that following the burst of pandemic-confirmed cases, the number of total expatriates was positively linked with the COVID-19 pandemic, thus rejecting H1 and the prior literature that external shocks affect expatriate levels (Bylander 2018; Dommaraju 2020). The results display robust support in both panels. Regarding the remaining controls, both inflation and risk stability positively impact total expatriates, according to H4 and H6. At the same time, higher industrial production and employment motivate immigrants to remain in the host country, i.e., Oman, thus accepting H3 and H5. Finally, the Sargan test accepts the null hypothesis in diagnostics, indicating that the instruments are exogenous and valid.

These regressions were then repeated, considering ethnicity’s role explicitly across the expatriate groups. The results presented in Tables 4, 5 and 6, focusing on the variable of primary interest (DCOVID19), provide evidence that in the case of expatriates from Bangladesh, India, Pakistan and Nepal (Fig. 3), the pandemic motivated immigrants to leave the country for their homeland. This aligns with H2 that the external shock affects migration, supporting Bylander (2018) and Dommaraju (2020) while rejecting Castles (2000) and Fischer and Malmberg (2001), who claimed that settled people do not migrate. The ethnic differences support Castles (2002) with respect to the difference between ethnic groups.

Table 4 OLS & IV estimates: Role of ethnicities in the Philippines, Nepal, & Egypt, February 2013 to February 2021, N = 97
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Table 5 OLS & IV estimates: Role of ethnicities in Sri Lanka, Pakistan & India, February 2013 to February 2021, N = 97
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Table 6 OLS and IV estimates: The role of ethnicities (Bangladesh, and Others) (February 2013 to February 2021-N = 97)
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Fig. 3
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Rapid decline of Nepalese, Bangladeshi, Pakistani and Indian expatriates in Oman monthly between February 2013 until February 2021. Data source: Datastream database (Thomson Reuters, 2022)

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In contrast, for expatriates from Sri Lanka, Egypt and the Philippines (Fig. 4), pandemic cases do not seem to discourage immigrants from staying in Oman. This is in accordance with H2 regarding the heterogeneity of expatriate decisions among ethnic groups. These results receive robust support from both the OLS and IV estimates. The remaining controls exert the same effect on the number of expatriates as in Table 5 in accordance with H3, The literature supports the positive effects of expatriates on growth (Ager & Brückner, 2013; Alesina & Ferrara, 2005; Bove & Elia, 2017; Chen & Fang, 2013; De Haan 1999; Gören 2014). The results are also consistent with H4 regarding the positive effects of inflation on expatriates (Furlanetto & Robstad, 2019), while not receiving support from Bentolila et al. (2008), Lach (2007) and Cortes (2008). The estimates are also in line with H5 and are relevant to the positive effects of employment opportunities on expatriates (Barrett & Burgess, 2008; DaVanzo 1978; Di Pietro 2005; Goss & Schoening, 1984; Karemera et al., 2000). Finally, these estimates are consistent with H6, supporting the role of political stability (Pratsinakis et al., 2020; Ramos 2020; Weiner 1992; Widgren 1990).

Fig. 4
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The moderate decline of Filipino, Sri Lankan and Egyptian expatriates in Oman monthly between February 2013 until February 2021. Data source: Datastream database (Thomson Reuters, 2022)

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Discussion

Many authors question the old paradigm prioritizing the global scale and downplaying the national or local scale, with substantial disruptions in global value chains and discussion regarding deglobalization arising again with arguments in favor of multi-polar globalization (Oldekop et al., 2020; Schwab & Malleret, 2020). Family members and social networks are critical in influencing immigration decisions (Boyd 1989). With increases in opportunity costs (fewer job opportunities) and transportation costs (higher moving expenses) and the developing psychological costs (difficulties keeping in contact), family members will either have difficulty moving towards host countries or even returning to the home country. This global trajectory might be reversing. In the past, expatriation consisted of moving of one’s own volition (Bozionelos 2009; Crowley-Henry 2012; Doherty 2013; Suutari & Brewster, 2000; Suutari & Taka, 2004).

The tendency to immigrate has been influenced by favorable self-selection (supply) based on a higher level of ability, education and self-efficacy (Chiswick 1999). Social relationships influence the decision to move (Stark & Bloom, 1985). Since immigratory decisions are not made in isolation, but only after discussions with families and relatives, it is expected that social relationships influence decisions to return home and reverse the brain drain. Immigrants use their social networks with integrated immigrants to receive detailed information, but this link was severely damaged after the pandemic. This research indicates that economic factors are important in determining immigration decisions. COVID-19 is an exogenous factor that reduced the number of opportunities, motivating employees to migrate or even stay in the host country.

Expatriates had lower employment rates than natives. The reversal occurred because the rate of job loss for expatriates rose relative to that of natives. More research needs to be conducted to understand the consequences of the pandemic’s labor market disruptions. This paper contributes to the literature by focusing on how the labor market shock affected expatriates, affecting ethnic expatriates differently (Figs. 2, 3 and 4). Historically, immigrants have had different employment rates compared to their native-born counterparts (Borjas 2017; Nekoei 2013). Our findings suggest that reverse movement should not be viewed in isolation as a homogenous exodus from the host countries without identifying ethnic differences among expatriates. Specific ethnic populations are expected to be less affected than others. Perhaps the example found in Oman is not isolated. Other countries might report similar results, and more investigation is required.

Global labor markets are undergoing an important transformation. Early on, some suggested that globalization was on pause (Petricevic & Teece, 2019) or reversed (Witt 2019), with COVID-19 decreasing labor efficiencies in the global labor market (Farndale et al., 2021) and immigration becoming a defining feature of the international labor market with substantial implications for individual countries (Boucher & Cerna, 2014).

Policy Recommendations

Large-scale repatriation is a colossal challenge for source countries that receive waves of returning expatriates and depend on the states’ capacities and the services they include. Examples include loan programs, insurance provisions, repatriation and reintegration education, skills training from their home countries, business accelerators, or stand-off income from their host countries.

For the host countries, a potential solution would be a labor market transformation in which firms needing temporary workers are expected to announce vacancies. Job seekers could also participate (Haak-Saheem 2020), and countries could issue temporary work permits and flexible visa schemes while encouraging digital nomad employees (Müller 2016) to continue working remotely unless manual labor is necessary. After repatriation, adjustment is a stressful experience (Begley et al., 2008). The propensity to move and the desire to remain in the host country or return home severely impact intentions to migrate (Richardson et al., 2008). Tharenou and Caulfield (2010) argued that the push and pull factors between host and home countries will attract workers in a constant tug of war. Beitlin (2012) suggests that proper communication is the catalyst for following employment opportunities. Home countries should be required to pull back their expatriates and offer them better employment opportunities, improved health and safety policies, and competitive salaries. Similarly, policy restrictions should be relaxed to allow trade unions to speed up the assimilation of returning expatriates into the workforce.

Conclusion

This article investigated whether COVID-19 positively affected expatriates leaving the country. Inflation and risk also exert a positive relationship, meaning that businesses are more eager to hire expatriates during uncertain times, while growth and employment opportunities motivate businesses to rely less on expatriates. The investigation indicated that including all the expatriates in the sample could mask the changing dynamics among ethnic groups. Investigating the direct impact on various ethnic groups (Pakistani, Filipino, Egyptians, Sri Lankans, Nepalese, Indians, and Bangladeshi), the analysis identified heterogeneity in the decisions to move or stay due to the pandemic. The findings indicated a decline for expatriates from certain ethnic groups (e.g., from Bangladesh, India, and Pakistan) compared with expatriates from other ethnic backgrounds (e.g., from Egypt, Sri Lanka, Filipino) in Oman due to the COVID-19 pandemic. The aggregate data might have caused us to support the neoclassical model. Still, ethnic differences might be erratic and based on the reference groups. Future research should contemplate the dynamics between groups and take into consideration that migration flows between ethnic groups are not static but volatile, depending on exogenous and endogenous factors within a host country.