CAP UZBEKISTAN POLICY BRIEF by Éva Berde and Myassar Kurbanova, February 11, 2026
The central policy challenge is not to maximize remittances, but to minimize deadweight loss by creating an economy in which young people can and want to build their futures at home. The demographic window is open, but it will close. Decisions taken now will determine whether Uzbekistan enters the next phase of its demographic transition with a strong productive base or with a lasting legacy of missed opportunity.
Éva Berde is a professor of economics at Széchenyi István University in Győr, Hungary, and also holds an affiliation also holds an affiliation with Corvinus University of Budapest. Her main research area focuses on the relationship between demography and the economy, which led her to study the evolution of the demographic dividend in Central Asia. Closely related to this work is the development of the concept of the deadweight loss of emigration, which is the central concept of the present study. In addition, Éva Berde conducts research on the gig economy and Massive Open Online Courses.
Muyassar Kurbanova is a researcher specializing in the intersection of labor economics and demography. She holds a PhD in Economics from Corvinus University of Budapest (Hungary). Her research focuses on the socio- economic impacts of demographic transitions, covering age discrimination in labor markets and changing patterns of international migration. She has authored several articles and papers, primarily focused on Central Asia.
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Policy context and problem statement
Uzbekistan is at a decisive moment in its demographic and economic trajectory. The country is experiencing a historically favorable age structure, with a large and growing cohort of young people entering working age. In principle, this creates a window of opportunity for accelerated growth through what is commonly described as the demographic dividend. In practice, however, this potential dividend is far from automatic. It depends critically on whether young people can be productively integrated into the domestic economy.
At the same time, Uzbekistan has become one of the largest labor-sending countries in Central Asia. Emigration is increasingly concentrated among young people, and while remittances constitute an important source of household income and foreign exchange, they also mask deeper structural weaknesses. The central policy question is therefore not whether migration exists, but whether the current pattern of youth emigration strengthens or weakens Uzbekistan’s long-term development prospects.
This policy brief, summarizing our research report, addresses this question by shifting the focus away from remittance inflows alone and toward the net economic consequences of emigration, taking into account lost production, labor market adjustment, and foregone domestic consumption. Using a novel analytical framework developed by us, the Deadweight Loss of Emigration (DWLE), the brief draws policy-relevant conclusions for Uzbekistan without relying on aggregate numerical indicators. Instead, it focuses on the direction and relative strength of effects across different migration scenarios.
Why remittances are an incomplete policy metric
Public debate often treats remittances as evidence that emigration is economically beneficial. From a short-term household perspective, this interpretation is understandable. Remittances reduce poverty, smooth consumption, and provide resilience against income shocks. However, from a national development perspective, this view is incomplete.
Remittances represent only one side of the balance sheet. They do not capture what the economy loses when a worker leaves: the value of what that person would have produced, the demand they would have generated, and the contribution they would have made to innovation, entrepreneurship, and institutional development. These losses are particularly relevant when emigrants are young and educated, as they are at the most productive stage of their working lives.
A policy framework that focuses solely on remittances risks encouraging a passive development model, in which domestic job creation and skill utilisation are postponed while labor export becomes a structural substitute for reform. The DWLE framework was developed precisely to address this blind spot.
The deadweight loss of emigration: an intuitive explanation
The DWLE framework adapts the classic economic concept of deadweight loss to the context of international migration. In simple terms, it asks the following counterfactual question: What would have happened to national income if the emigrant had remained and worked at home?
The framework combines four elements:
- Lost production: when a worker leaves, the economy loses their potential output.
- Replacement capacity: some of this loss may be offset if other workers can take over the role.
- Lost domestic consumption: emigrants spend their income abroad rather than domestically, reducing multiplier effects.
- Remittances: money sent back partially compensates for these losses.
DWLE captures the net outcome of these opposing forces. Importantly, it allows the result to differ by skill level, reflecting the fact that high-, medium-, and low-skilled workers interact with the labour market in fundamentally different ways.
Three migration scenarios and their economic meaning
The DWLE analysis evaluates three stylized scenarios corresponding to different skill profiles of emigrants. The policy relevance lies not in exact values, but in how these scenarios compare to one another.
High-skilled emigration: a clear net loss
When highly educated and skilled young people emigrate, the DWLE outcome is negative (or, viewed from the opposite direction, represents a positive loss). This means that remittances and labor market adjustment do not compensate for what the economy loses.
The reasons are structural. High-skilled workers are harder to replace in the short and medium term. Their productivity is typically above average, and their roles are often embedded in complex organizational and institutional contexts. When they leave, vacancies remain unfilled or are filled less efficiently, reducing overall productivity. Moreover, highly skilled emigrants are less likely to remit substantial shares of their income, because their aim is to live and work abroad rather than to provide for their families, especially when they migrate with their families or pursue permanent settlement abroad.
From a policy perspective, this scenario represents classic brain drain. The country bears the cost of education and socialization, while the returns are realized elsewhere. The DWLE framework shows that this is not merely a social concern but a systemic economic loss.
Medium-skilled emigration: a moderate but persistent loss
For medium-skilled emigrants, the DWLE outcome remains negative (or, viewed from the opposite direction, represents a positive loss), but the magnitude of the loss is smaller than in the high-skilled case. These workers are easier to replace than highly specialized professionals, and their productivity is closer to the national average. Nevertheless, replacement remains incomplete, and remittances do not fully offset the resulting losses in output and consumption multipliers.
This scenario is particularly relevant for Uzbekistan, where vocational and technical skills are in domestic demand but often poorly matched with labor market needs. The DWLE results indicate that losing this group weakens the productive core of the economy, even if the effects are less dramatic than those associated with elite professionals.
Low-skilled emigration: an apparent short-term gain
In contrast, the DWLE outcome for low-skilled emigration is positive (or viewed from the opposite direction represents a negative loss). In purely economic terms, remittances exceed the value of lost production and consumption. Jobs vacated by low-skilled workers are quickly filled, and in a labor-surplus economy this can ease pressure on unemployment and informality.
However, this apparent gain must be interpreted with caution. It does not indicate economic strength. On the contrary, it signals that the domestic economy is unable to productively absorb large numbers of low-skilled workers. In a more developed labor market, losing even low skilled workers would be costly.
From a policy standpoint, a positive DWLE for low-skilled emigration is a warning sign, not a success story. It reflects structural weakness rather than comparative advantage.
What determines the size of the loss or gain?
To understand why DWLE differs across scenarios and over time, the analysis examines several structural factors using an error correction modeling approach. The results consistently point to four policy-relevant drivers.
First, education matters, but not in isolation. Higher completion and enrollment rates reduce the economic loss associated with emigration by increasing the pool of potential replacements. However, education alone cannot eliminate DWLE if the economy fails to create suitable jobs. Without sufficient labor demand, education can paradoxically increase emigration pressure.
Second, youth labor market exclusion plays a central role. High unemployment and a large share of young people who are not in education, employment, or training significantly increase the economic cost of emigration. When many young people are disengaged, the economy lacks the internal flexibility needed to absorb shocks. The departure of even a small number of skilled workers can create disproportionate damage.
Third, demographic structure interacts with policy capacity. A large youth cohort can reduce DWLE only if it is effectively integrated. Demography alone does not determine outcome. Without institutions and labor market mechanisms that facilitate the transition from school to work, a youth bulge amplifies losses rather than mitigating them.
Fourth, institutional quality and human rights protection matter for retention. Stronger institutions reduce incentives for skilled individuals to leave and lower the economic costs associated with potential emigration. Conversely, weak governance transforms migration from a choice into a necessity, deepening DWLE.
Policy implications: reframing migration strategy
The DWLE framework leads to several important policy conclusions.
First, not all emigration is equal. Treating migration as a homogeneous phenomenon obscures crucial differences by skill level. Policies that implicitly encourage low-skilled labor export while neglecting domestic skill utilization risk locking the country into a low-development equilibrium.
Second, remittances should not substitute for reform. While they provide short-term relief, reliance on remittances delays necessary investments in job creation, skills matching, and institutional quality. Over time, this increases vulnerability to external shocks and demographic aging.
Third, the demographic dividend is time-limited. Uzbekistan’s favorable age structure will not last indefinitely. If the current cohort of young people is not productively employed at home, the country will face population aging without having accumulated sufficient human and institutional capital.
Targeted policy directions
Based on these findings, several policy directions emerge.
• Strengthen school-to-work transitions
Priority should be given to reducing NEET rates through apprenticeships, employer linked training, and active labor market programs. Keeping young people engaged reduces DWLE more effectively than marginal improvements in education alone.
• Align education with domestic demand
Higher education expansion must be accompanied by quality assurance, curriculum reform, and stronger links to the private sector. Otherwise, education becomes a driver of emigration rather than retention.
• Create incentives for skilled retention and return
Transparent career pathways, merit-based recruitment, and predictable institutions reduce incentives to emigrate. Where emigration occurs, policies should encourage circulation rather than permanent loss.
Treat low-skilled emigration as a transition, not a strategy. Apparent short-term gains from low-skilled emigration should not be institutionalized. The long-term objective must be domestic job creation that makes such emigration economically unnecessary.
Concluding message for policymakers
Uzbekistan’s youth are not a problem to be managed but a resource to be mobilized. The DWLE framework demonstrates that the economic consequences of emigration depend critically on who leaves, under what conditions, and within which institutional environment. While low-skilled emigration may appear beneficial in the short run, it signals structural weakness. High and medium-skilled emigration, by contrast, represents a clear and lasting economic loss.
The central policy challenge is therefore not to maximize remittances, but to minimize deadweight loss by creating an economy in which young people can and want to build their futures at home. The demographic window is open, but it will close. Decisions taken now will determine whether Uzbekistan enters the next phase of its demographic transition with a strong productive base or with a lasting legacy of missed opportunity.
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