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Split Decisions: Household Finance When a Policy Discontinuity Allocates Overseas Work

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  • Michael A. Clemens

    (Center for Global Development and IZA)

  • Erwin R. Tiongson

    (Georgetown University, IZA, and Asian Institute of Management)

Abstract

Temporary overseas work can both raise a family's income and split the household geographically, with theoretically ambiguous net effects on spending, finance, and labor supply decisions. We study a policy discontinuity in the Philippines that quasi-randomly assigned temporary, partial-household migration for high-wage jobs inKorea. This allows quasiexperimental estimates of reduced-form effects of migration. We find that migration causes large changes in households' spending and saving—not only through remittances but also migration-induced shifts in household decision-making power. Migration does not reduce labor supply by nonmigrants. Common nonexperimental estimators would have been subject to substantial selection bias in this setting.

Suggested Citation

  • Michael A. Clemens & Erwin R. Tiongson, 2017. "Split Decisions: Household Finance When a Policy Discontinuity Allocates Overseas Work," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 531-543, July.
    • Handle: RePEc:tpr:restat:v:99:y:2017:i:3:p:531-543
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