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Distortions in the International Migrant Labor Market: Evidence from Filipino Migration and Wage Responses to Destination Country Economic Shocks

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Author Info

  • David McKenzie

    ()
    (Development Research Group, World Bank and BREAD, CEPR, CReAM and IZA)

  • Caroline Theoharides

    ()
    (Department of Economics and Ford School of Public Policy, University of Michigan)

  • Dean Yang

    ()
    (Department of Economics and Ford School of Public Policy, University of Michigan, NBER, and BREAD)

Abstract

We use an original panel dataset of migrant departures from the Philippines to identify the responsiveness of migrant numbers and wages to GDP shocks in destination countries. We find a large significant elasticity of migrant numbers to GDP shocks at destination, but no significant wage response. This is consistent with binding minimum wages for migrant labor. This result implies that labor market imperfections that make international migration attractive also make migrant flows more sensitive to global business cycles. Difference-in-differences analysis of a minimum wage change for maids confirms that minimum wages bind and demand is price sensitive without these distortions.

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Bibliographic Info

Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 1209.

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Date of creation: Apr 2012
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Handle: RePEc:crm:wpaper:1209

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Keywords: international migration; migrant demand; labor output elasticity; minimum wages.;

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  1. David McKenzie & John Gibson & Steven Stillman, 2006. "How Important is Selection? Experimental vs Non-experimental Measures of Income Gains from Migration," Working Papers in Economics 06/03, University of Waikato, Department of Economics.
  2. Dean Yang, 2008. "International Migration, Remittances and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," Economic Journal, Royal Economic Society, vol. 118(528), pages 591-630, 04.
  3. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
  4. Michael A. Clemens, 2011. "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 83-106, Summer.
  5. Gibson, John & McKenzie, David & Stillman, Steven, 2010. "Accounting for selectivity and duration-dependent heterogeneity when estimating the impact of emigration on incomes and poverty in sending areas," Policy Research Working Paper Series 5268, The World Bank.
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Cited by:
  1. Ortega, Francesc & Peri, Giovanni, 2012. "The Role of Income and Immigration Policies in Attracting International Migrants," IZA Discussion Papers 6655, Institute for the Study of Labor (IZA).
  2. Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2011. "Multilateral Resistance to Migration," IZA Discussion Papers 5958, Institute for the Study of Labor (IZA).
  3. Francesc Ortega & Giovanni Peri, 2012. "The Effect of Income and Immigration Policies on International Migration," NBER Working Papers 18322, National Bureau of Economic Research, Inc.

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