nep-mig New Economics Papers
on Economics of Human Migration
Issue of 2018‒08‒27
nineteen papers chosen by
Yuji Tamura
La Trobe University

  1. Shift-Share Instruments and the Impact of Immigration By David A. Jaeger; Joakim Ruist; Jan Stuhler
  2. U.S. Immigration and Policy Brain Waste By Ayoung Kim; Brigitte S. Waldorf; Natasha T. Duncan
  3. Fear and the Safety Net: Evidence from Secure Communities By Marcella Alsan; Crystal Yang
  4. What are Migrants Willing to Pay for Better Home Country Institutions?: The Case of Viet Nam By Ngoc Thi Minh Tran; Michael P. Cameron; Jacques Poot
  5. Involuntary return migration to Kosovo: Tackling challenges for successful reintegration By Möllers, Judith; Traikova, Diana; Herzfeld, Thomas; Bajrami, Egzon
  6. The Impact of Immigration on Firm Level Offshoring By Olney , William W.; Pozzoli , Dario
  7. Immigrant Voters, Taxation and the Size of the Welfare State By Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
  8. Naturalization and labor market performance of immigrants in Germany By Regina T. Riphahn; Salwan Saif
  9. Why Are So Few Africans at Work in Ireland? Immigration Policy and Labour Market Disadvantage By Philip J O'Connell
  10. EU labour in agricultural sector of the United Kingdom By Barathova, Katarina
  11. What push migrants out of their rural areas? Empirical evidences from Sub-Saharan Africa By Lantz, Tiffany Louise; Arbolino, Roberta; Caracciolo, Francesco; Cembalo, Luigi
  12. Job Displacement, Inter-Regional Mobility and Long-Term Earnings By Maczulskij, Terhi; Böckerman, Petri; Kosonen, Tuomas
  13. Immigration and trade: the case study of Veneto region in Italy By Fiorentini, Riccardo; Verashchagina, Alina
  14. Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement By Lorenzo Caliendo; Fernando Parro; Alessandro Sforza; Luca David Opromolla
  15. Location as an Asset By Adrien Bilal; Esteban Rossi-Hansberg
  16. Human Capital and Migration: a Cautionary Tale By Salvador Navarro; Jin Zhou
  17. Distributing the Green (Cards): Permanent Residency and the Income Tax after the Immigration Reform and Control Act of 1986 By Elizabeth U. Cascio; Ethan G. Lewis
  18. On Regional Borrowing, Migration, and Default By Grey Gordon; Pablo Guerron-Quintana
  19. To Go or not to Go: Migration Alleviates Climate Damages even for Those Who Stay Behind By Shayegh, Soheil; Casey, Greg P.

  1. By: David A. Jaeger (City University of New York Graduate Center); Joakim Ruist (University of Gothenburg); Jan Stuhler (Universidad Carlos III de Madrid)
    Abstract: A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants’ location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants’ past geographic distribution. We present evidence that estimates based on this “shift-share” instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a “multiple instrumentation” procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.
    Keywords: immigration, geographic variation, shocks, multiple instrumentation, spatial analysis
    JEL: C36 J15 J21 J61
    Date: 2018–02
  2. By: Ayoung Kim; Brigitte S. Waldorf; Natasha T. Duncan
    Abstract: The U.S. H-1B visa for highly-skilled immigrant labor and the accompanying H-4 visa for their dependents leads to structural constraints that exclude dependents from the labor force. Identifying H-1B recipients from the U.S. Census and American Community Surveys, we find that—despite the labor force exclusion—the vast majority of married H-1B recipients is accompanied by their spouses. This is particularly the case for male H-1B recipients, making wives rather than husbands carry most of the burden. Using a matched sample of married immigrants with work authorization, we estimate counterfactual labor force participation probabilities and wages for the sample of dependent H-4 spouses. We find that the policy-imposed labor force exclusion of H-4 spouses leads to substantial losses of spouses’ earnings and annual aggregate productivity loss of over US$2.1 billion.
    Keywords: Labor and Human Capital, Political Economy, Research Methods/ Statistical Methods
    Date: 2017–09–07
  3. By: Marcella Alsan; Crystal Yang
    Abstract: This paper explores the impact of fear on the incomplete take-up of safety net programs in the United States. We exploit changes in deportation fear due to the roll-out and intensity of Secure Communities (SC), an immigration enforcement program that empowers the federal government to check the immigration status of anyone arrested by local police, leading to the forcible removal of approximately 380,000 immigrants. We estimate the spillover effect of SC on the take-up of federal means-tested programs by Hispanic citizens. Though not at personal risk of deportation, Hispanic citizens may fear their participation could expose non-citizens in their network to immigration authorities. We find significant declines in SNAP and ACA enrollment, particularly among mixed-citizenship status households and in areas where deportation fear is highest. The response is muted for Hispanic households residing in sanctuary cities. Our results are most consistent with network effects that perpetuate fear rather than lack of benefit information or stigma.
    JEL: I14 I3 K00
    Date: 2018–06
  4. By: Ngoc Thi Minh Tran (University of Waikato); Michael P. Cameron (University of Waikato); Jacques Poot (University of Waikato)
    Abstract: We conduct the first contingent valuation investigation of the preference of international migrants for better home country institutional quality. Our study uses contingent valuation questions in a survey of Vietnamese migrants living in New Zealand (NZ) in 2016 to establish the compensating differentials that make those migrants indifferent between residing in New Zealand and returning to Viet Nam (VN) in hypothetical scenarios. We find that the estimated willingness to pay for an incremental unit improvement in institutional quality in Viet Nam is, on average, NZD 79.80 per week (approximately 33 percent of the average weekly wage in Viet Nam for the same period), and positively associated with the respondents’ age and the perceived importance of institutional quality in Viet Nam to their repatriation intentions. This study underscores the importance of institutional quality to migration decisions by showing that migrants are willing to trade-off part of their regular income for better home country institutional quality.
    Keywords: return migration; institutional quality; contingent valuation method; willingness to pay;Viet Nam
    JEL: F22 O15 H40
    Date: 2018–08–13
  5. By: Möllers, Judith; Traikova, Diana; Herzfeld, Thomas; Bajrami, Egzon
    Abstract: Kosovo currently faces the challenge of reintegrating thousands of returned migrants who left the country in 2014 /2015. This migration wave was discussed in the IAMO Policy Brief 24. After facing restrictive asylum policies in the destination countries in Western Europe, more than 20,000 people returned to Kosovo in 2015 and 2016. Based on the results of an empirical survey of around 180 returnees, this policy brief discusses a number of reintegration issues. In addition to low levels of education and skills, reintegration is impeded above all by the precarious state of Kosovo’s labour market. This is compounded by a psychological burden that often arises from the sometimes traumatic experience of migration and involuntary return. The migration of Kosovars is at risk of becoming a vicious cycle composed of involuntary return and problems reintegrating, resulting in a further attempt at migration. Indeed, the results of the study show that many returnees do not intend to remain in Kosovo.
    Keywords: Community/Rural/Urban Development, Labor and Human Capital
    Date: 2017–11–24
  6. By: Olney , William W.; Pozzoli , Dario (Department of Economics, Copenhagen Business School)
    Abstract: This paper studies the relationship between immigration and offshoring by examining whether an influx of foreign workers reduces the need for firms to relocate jobs abroad. We exploit a Danish quasi-natural experiment in which immigrants were randomly allocated to municipalities using a refugee dispersal policy and we use the Danish employer-employee matched data set covering the universe of workers and firms over the period 1995-2011. Our findings show that an exogenous influx of immigrants into a municipality reduces firm-level offshoring at both the extensive and intensive margins. The fact that immigration and offshoring are substitutes has important policy implications, since restrictions on one may encourage the other. While the multilateral relationship is negative, a subsequent bilateral analysis shows that immigrants have connections in their country of origin that increase the likelihood that firms offshore to that particular foreign country.
    Keywords: Immigration; Offshoring
    JEL: F16 F22 F23 J61
    Date: 2018–04–12
  7. By: Arnaud Chevalier (Royal Holloway University of London and the Institute of Labor Economics); Benjamin Elsner (University College Dublin, IZA and CReAM); Andreas Lichter (IZA); Nico Pestel (IZA and ZEW Mannheim)
    Abstract: This paper studies the impact of immigration on public policy setting. As a natural experiment, we exploit the sudden arrival of eight million forced migrants in West Germany after World War II. These migrants were on average poorer than the West German population, but unlike most international migrants they had full voting rights and were eligible for social welfare. Using panel data for West German cities and applying difference-in-differences and an instrumental variables approach, we show that local governments responded to this migration shock with selective and persistent tax raises as well as shifts in spending. In response to the inflow, farm and business owners were taxed more while residential property and wage bill taxes were left unchanged. Moreover, high-inflow cities significantly raised welfare spending while reducing spending on infrastructure and housing. Election data suggest that these policy changes were partly driven by the political influence of the immigrants: in high-inflow regions, the major parties were more likely to nominate immigrants as candidates, and a pro-immigrant party received high vote shares. We further document that this episode of mass immigration had lasting effects on people’s preferences for redistribution. In areas with larger inflows in the 1940s, people have substantially higher demand for redistribution more than 50 years later.
    Date: 2018–08–06
  8. By: Regina T. Riphahn; Salwan Saif
    Abstract: Naturalization may be a relevant policy instrument affecting immigrant integration in host-country labor markets. We study the effect of naturalization on labor market outcomes of immigrants in Germany. We apply recent survey data and exploit a reform of naturalization rules in an instrumental variable estimation. In our sample of recent immigrants, linear regression yields positive correlations between naturalization and beneficial labor market outcomes. Once we account for the endogeneity of naturalization most coefficients decline in magnitude and lose statistical significance: male immigrants' labor market outcomes do not benefit significantly from naturalization. Naturalization reduces the risks of unemployment and welfare dependence for female immigrants. For males and females, the propensity to hold a permanent contract increase as a consequence of naturalization. The results are robust to modifications of samples and the instrument.
    Keywords: citizenship, migration, naturalization, labor market outcomes, instrumental variables
    JEL: J61 J15 C26
    Date: 2018–08
  9. By: Philip J O'Connell (UCD Geary Institute for Public Policy)
    Abstract: This paper set out to explore why African immigrants have poor labour market outcomes in Ireland, with very low employment and exceptionally high unemployment rates. The analysis draws on data from the 2011 Census of Population to examine underlying differences of experience and of composition between different groups of immigrants. Controlling for individual characteristics of immigrants suggests that the labour market disadvantages suffered by Africans cannot be attributed to compositional differences: on average, Africans in Ireland are a relatively well-educated group concentrated in the prime working-age groups. The paper investigates an alternative explanation that suggests that some of the African disadvantage may be due to the policy of excluding asylum seekers from the labour market in the Direct Provision system. I create a novel measure of the risk of being exposed to the Irish asylum system by expressing the number of asylum seekers in the years prior to the 2011 Census as a proportion of the resident population from each country. These asylum risk variables are found to influence labour market outcomes, reducing employment chances and increasing unemployment odds. Moreover, their inclusion in the models also reduce the effects of belonging to the African and Asian immigrant groups, both of whom are heavily represented in the asylum system in Ireland. Even controlling for individual characteristics and the risk of exposure to the asylum system, there remains a substantial residual African disadvantage in both employment and unemployment, which may be due to discriminatory practices by employers.
    Date: 2018–08–03
  10. By: Barathova, Katarina
    Abstract: Today, many EU states face labour shortages in different sectors of economy, including agricultural sectors. Labour migration represents the solution which enables countries to cope with this problem. This is also the case of agricultural sector of the United Kingdom. After the EU enlargement, out of all old Member States only the United Kingdom alongside with Ireland and Sweden granted people from the Central and Eastern Europe countries free access to their labour markets. In case of the UK this was seen as strategic step, since the government recognized the important role of migrant workers in the growth of the UK’s economy. Soon after enlargement, the UK became favourite destination of migrant workers from A-8 countries. In 2007, when another two countries – Bulgaria and Romania joined the EU, the economic situation was different and the UK decided to apply transitional arrangements. Despite this, there were a lot of migrants coming to the UK and most of them were working in agriculture, since for seasonal agricultural workers there was an exception. After the restrictions were removed in January, 2014, migration inflows from Bulgaria and Romania almost doubled. Before referendum in 2016, migration was an important issue and one of the main arguments of Leave campaign. Using available statistical data, the paper examines migration flows to the UK and describes key features of migration from EU with special focus on A-10 countries. The main objective is to evaluate the importance of migrant workers from these new Member States in the agriculture and food manufacturing industry of the UK and reveal possible implications associated with Brexit.
    Keywords: agriculture,migration,labour,horticulture,EU workers
    JEL: J61 F22 Q10
    Date: 2018
  11. By: Lantz, Tiffany Louise; Arbolino, Roberta; Caracciolo, Francesco; Cembalo, Luigi
    Abstract: The uncertainty and the generic nature of the migration determinants, combined with the subsequent lack of specific policies implemented to improve the economic conditions of the developing or underdeveloped countries, has generated the need to study these causes in detail. We use nationally representative data from Ethiopia’s 2015/16 Socioeconomic Survey (ESS) to examine the socioeconomic determinants of migration of this specific sub-Saharan country. By performing a logistic regression we drive the migration decision at household level. We also consider some of the observable trends on migration flows from this area of the world. Empirical results lend credence to the fact that in Ethiopia the decision to migrate is family based and that the probability to have a migrant in the household depends on households size as well as on some residence region.
    Keywords: Community/Rural/Urban Development, International Development
    Date: 2017–08–31
  12. By: Maczulskij, Terhi (Labour Institute for Economic Research); Böckerman, Petri (Labour Institute for Economic Research); Kosonen, Tuomas (Labour Institute for Economic Research)
    Abstract: We examine the effect of job displacement on regional mobility using linked employer-employee panel data for the 1995-2014 period. We also study whether displaced movers obtain earnings and employment gains compared to displaced stayers. The results show that job displacement increases the migration probability by ~70%. However, social capital in a region and housing characteristics decrease the propensity to move, indicating that people do not make the migration decisions solely based on short-term economic incentives. Migration has an immediate negative relationship with earnings, but the link diminishes as time passes and eventually turns positive for men. The link between migration and employment is nevertheless positive and persistent for both genders.
    Keywords: unemployment, job displacement, migration, earnings, employment
    JEL: J61 J63
    Date: 2018–06
  13. By: Fiorentini, Riccardo; Verashchagina, Alina
    Abstract: This paper investigates the relation between immigration and trade by focusing on Veneto region in Italy. The reference period is 2008-2015, interfering with the economic crisis, thus the results obtained can be time specific. The presence of immigrants in Veneto was constantly on the rise, also during the crisis, although at a slower pace compared to pre-crisis years. The question is which role could this play in ascertaining the stability, if not expansion, of trade relations between the region and the countries of immigrants' origin. The estimates of gravity model suggest a non-linear relationship between the number of immigrants and total exports from (imports to) the host-province to (from) the country of origin. The type of this relation moreover differs by sector of origin of trade. The effect on imports is mainly concentrated in manufacturing, whereas that on exports is more evenly distributed among several sectors. In particular, agriculture, mining, manufacturing, water supply and wastes managements are the ones which react positively by exporting more in response to increase in the number of immigrants. This could mean that further inflow of immigrants can potentially induce shifts in the structure of local economy of Veneto region which is highly dependent on international trade.
    Keywords: International Development, International Relations/Trade
    Date: 2017–07–31
  14. By: Lorenzo Caliendo; Fernando Parro; Alessandro Sforza; Luca David Opromolla
    Abstract: The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model with trade in goods and labor mobility across countries to study and quantify the economic effects of trade and labor market integration. In our model trade is costly and features households of different skills and nationalities facing costly forward-looking relocation decisions. We use the EU Labour Force Survey to construct migration flows by skill and nationality across 17 countries for the period 2002-2007. We then exploit the timing variation of the 2004 EU enlargement to estimate the elasticity of migration flows to labor mobility costs, and to identify the change in labor mobility costs associated to the actual change in policy. We apply our model and use these estimates, as well as the observed changes in tariffs, to quantify the effects from the EU enlargement. We find that new member state countries are the largest winners from the EU enlargement, and in particular unskilled labor. We find smaller welfare gains for EU-15 countries. However, in the absence of changes to trade policy, the EU-15 would have been worse off after the enlargement. We study even further the interaction effects between trade and migration policies and the role of different mechanisms in shaping our results. Our results highlight the importance of trade for the quantification of the welfare and migration effects from labor market integration.
    JEL: E24 F13 F16 F22 J61 R13
    Date: 2017
  15. By: Adrien Bilal; Esteban Rossi-Hansberg
    Abstract: The location of individuals determines their job opportunities, living amenities, and housing costs. We argue that it is useful to conceptualize the location choice of individuals as a decision to invest in a ‘location asset.’ This asset has a cost equal to the location's rent, and a payoff through better job opportunities and, potentially, more human capital for the individual and her children. As with any asset, savers in the location asset transfer resources into the future by going to expensive locations with good future opportunities. In contrast, borrowers transfer resources to the present by going to cheap locations that offer few other advantages. As in a standard portfolio problem, holdings of this asset depend on the comparison of its rate of return with that of other assets. Differently from other assets, the location asset is not subject to borrowing constraints, so it is used by individuals with little or no wealth that want to borrow. We provide an analytical model to make this idea precise and to derive a number of related implications, including an agent's mobility choices after experiencing negative income shocks. The model can rationalize why low wealth individuals locate in low income regions with low opportunities even in the absence of mobility costs. We document the investment dimension of location, and confirm the core predictions of our theory with French individual panel data from tax returns.
    JEL: D14 E21 J61 J62 R13 R23 R30
    Date: 2018–07
  16. By: Salvador Navarro (University of Western Ontario); Jin Zhou (University of Chicago)
    Abstract: We study the interaction of migration and education decisions, and their effects on labor market outcomes of individuals in sending locations. We consider the possibility that, while the level of human capital affects the migration decisions of an individual (i.e., self-selection of migrants), it is also the case that the possibility of migration itself affects the human capital accumulation decisions of agents. In particular, we first analyze how the migration option can reduce the incentives to accumulate human capital in the context of a simple Roy model with exogenous migration. As we show, even when the return to migrating is positive,if the return to education for migrants is lower in the receiving location than in the sending location, the mere possibility of migrating reduces the returns to human capital accumulation for people in the sending location. We analyze data on rural migration in China, where this pattern of returns seems to hold. We then use diff-in-diff to show that, consistent with our simple model's prediction, educational attainment in rural China slowed down compared to urban regions after an early 80's reform that relaxed the restrictions to rural migration. Finally, we build a structural model of rural-urban migration in China, where we estimate the reduction in migration costs that happened as a consequence of the reform. To quantify the effect of the policy, we simulate what would have happened had the policy not been implemented. We find that the attendance rates for high school, some college and college would have increased by 29%, 141%, and 24%, respectively.
    Date: 2018
  17. By: Elizabeth U. Cascio; Ethan G. Lewis
    Abstract: We explore how permanent residency affects the income tax using variation from the Immigration Reform and Control Act of 1986 (IRCA), which authorized the largest U.S. amnesty to date. We exploit the timing and geographic unevenness of IRCA’s legalization programs alongside newly digitized data on the income tax in California, home to the majority of applicants. Green Cards induced the previously unauthorized to file state income tax returns at rates comparable to other California residents. While the new returns generated little additional revenue through the end of the 1990s, they did raise the earnings of families with children through new claims of the federal Earned Income Tax Credit.
    JEL: H24 H53 H71 J61
    Date: 2018–07
  18. By: Grey Gordon (Indiana University); Pablo Guerron-Quintana (Boston College)
    Abstract: Migration plays a key roll in city finances with every new entrant reducing debt per person and every exit increasing it. We study the interactions between regional borrowing, migration, and default from empirical, theoretical, and quantitative perspectives. Empirically, we document that intercity migration rates are high in the U.S. (exceeding 6%), in-migration rates are negatively correlated with deficits, and many cities appear to be at or near state-imposed borrowing limits. Additionally, we show defaults can occur after booms or busts in labor productivity and population. Our quantitative model is able to rationalize these features of the data in large part because of a key externality that induces over-borrowing. Counterfactuals in the model reveal (1) Detroit should have slashed spending and raised taxes in 2008 to avoid default; (2) migration is overwhelmingly positive for the economy, boosting GDP by 18% or more and reducing income inequality; (3) a return to the high-interest rate environment prevailing in the 1990s could double default rates; and (4) halving the dispersion of geographic-specific productivity---which we document occurred from 1986 to 2000---can potentially account for all of the secular decline in migration rates from 1991 to 2011. This last finding provides additional support for the mechanism proposed in Kaplan and Schulhofer-Wohl (2017).
    Date: 2018
  19. By: Shayegh, Soheil; Casey, Greg P.
    Abstract: We examine the effect of climate change on fertility rates and human capital accumulation in developing countries, focusing on the instrumental role of migration. In particular, we investigate how climate-induced migration in developing countries will affect those who do not migrate. Holding all else constant, climate shocks raise the return to acquiring skills, because skilled individuals compared to unskilled ones have greater opportunity to migrate after the shock. In response to this change in incentives, parents choose to invest more in education and have less children, a process known as the ‘quantity-quality’ trade-off. These effects partially offset the damages of climate change, even for those who do not migrate.
    Keywords: Environmental Economics and Policy
    Date: 2017–12–21

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