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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

  • McKenzie, David

    ()
    (World Bank)

  • Theoharides, Caroline

    ()
    (University of Michigan)

  • Yang, Dean

    ()
    (University of Michigan)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6498.

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Length: 41 pages
Date of creation: Apr 2012
Date of revision:
Publication status: forthcoming in: American Economic Journal: Applied Economics
Handle: RePEc:iza:izadps:dp6498

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

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References

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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. John Gibson & David McKenzie & Steven Stillman, 2013. "Accounting for Selectivity and Duration-Dependent Heterogeneity When Estimating the Impact of Emigration on Incomes and Poverty in Sending Areas," Economic Development and Cultural Change, University of Chicago Press, vol. 61(2), pages 247 - 280.
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Cited by:
  1. Simone Bertoli & Jesús Fernández-HuertasMoraga, 2011. "Multilateral Resistance to Migration," Working Papers 2011-04, FEDEA.
  2. 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).
  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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