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Abundance from Abroad: Migrant Income and Long-Run Economic Development

Author

Listed:
  • Gaurav Khanna
  • Emir Murathanoglu
  • Caroline B. Theoharides
  • Dean Yang

Abstract

How does income from international migrant labor affect the long-run development of migrant-origin areas? We leverage the 1997 Asian Financial Crisis to identify exogenous and persistent changes in international migrant income across regions of the Philippines, derived from spatial variation in exposure to exchange rate shocks. The initial shock to migrant income is magnified in the long run, leading to substantial increases in income in the domestic economy in migrant-origin areas; increases in population education; better-educated migrants; and increased migration in high-skilled jobs. 77.3% of long-run income gains are actually from domestic (rather than international migrant) income. A simple model yields insights on mechanisms and magnitudes, in particular that 23.2% of long-run income gains are due to increased educational investments in origin areas. Improved income prospects from international labor migration not only benefit migrants themselves, but also foster long-run economic development in migrant-origin areas.

Suggested Citation

  • Gaurav Khanna & Emir Murathanoglu & Caroline B. Theoharides & Dean Yang, 2022. "Abundance from Abroad: Migrant Income and Long-Run Economic Development," NBER Working Papers 29862, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29862
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    Cited by:

    1. Christian Dustmann & Hyejin Ku & Tetyana Surovtseva, 2023. "Real Exchange Rates and the Earnings of Immigrants," The Economic Journal, Royal Economic Society, vol. 134(657), pages 271-294.
    2. Bocquier, Philippe & Cha’Ngom, Narcisse & Docquier, Frédéric & Machado, Joël, 2023. "The Within-Country Distribution of Brain Drain and Brain Gain Effects: A Case Study on Senegal," IZA Discussion Papers 16497, Institute of Labor Economics (IZA).
    3. Cha’Ngom, Narcisse & Deuster, Christoph & Docquier, Frédéric & Machado, Joël, 2023. "Selective Migration and Economic Development: A Generalized Approach," IZA Discussion Papers 16222, Institute of Labor Economics (IZA).
    4. De Arcangelis, Giuseppe & Fertig, Alexander & Liang, Yuna & Srouji, Peter & Yang, Dean, 2023. "Measuring remittances," Journal of Development Economics, Elsevier, vol. 161(C).

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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