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Moving to Opportunity, Leaving Behind What? Evaluating the Initial Effects of a Migration Policy on Incomes and Poverty in Source Areas

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Author Info
David McKenzie () (The World Bank)
John Gibson (University of Waikato)
Steven Stillman (Motu Economic and Public Policy Research)

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Abstract

Migration to New Zealand and consequent remittance inflows are dominant features of many Pacific Island countries. Evaluating the effect of these people and money flows on incomes and poverty in the Pacific is potentially complicated by the non-random selection of emigrants. This paper uses the randomization provided by an immigration ballot under the Pacific Access Category (PAC) of New Zealand’s immigration policy to address this problem. We survey applicants to the 2002-05 PAC ballots in Tonga and compare outcomes for the remaining family of emigrants with those for similar families who were unsuccessful in the ballots. We then contrast these estimates with more conventional ones that construct no-emigration counterfactuals by deducting remittance income from the remaining family of PAC emigrants and adding back the potential home earnings of emigrants. The results suggest that the economic welfare of remaining family may fall in the initial period after members of their household move to New Zealand. We also find that non-experimental methods of constructing counterfactual income are likely to work well only in rare situations where there is random selection of emigrants.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0723.pdf
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Publisher Info
Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 07/23.

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Length: 20 pages
Date of creation: 10 Nov 2007
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Handle: RePEc:wai:econwp:07/23

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Related research
Keywords: emigration natural experiment poverty remittances

Other versions of this item:

Find related papers by JEL classification:
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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  1. Barham, Bradford & Boucher, Stephen, 1998. "Migration, remittances, and inequality: estimating the net effects of migration on income distribution," Journal of Development Economics, Elsevier, vol. 55(2), pages 307-331, April. [Downloadable!] (restricted)
  2. Lopez, J. Humberto & Fajnzylber, Pablo & Acosta, Pablo, 2007. "The impact of remittances on poverty and human capital : evidence from Latin American household surveys," Policy Research Working Paper Series 4247, The World Bank. [Downloadable!]
  3. 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. [Downloadable!]
  4. David McKenzie & John Gibson & Steven Stillman, 2006. "How Important Is Selection? Experimental vs. Non-Experimental Measures of the Income Gains from Migration," IZA Discussion Papers 2087, Institute for the Study of Labor (IZA). [Downloadable!]
  5. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer, vol. 18(2), pages 229-260, 06. [Downloadable!] (restricted)
  6. Richard P.C. Brown & Gareth Leeves, 2007. "Impacts of International Migration and Remittances on Source Country Household Incomes in Small Island States; Fiji and Tonga," Working Papers 07-13, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  7. John Gibson & David McKenzie & Halahingano Rohorua, 2006. "How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand," Working Papers in Economics 06/02, University of Waikato, Department of Economics. [Downloadable!]
  8. Joshua Angrist, 2004. "Treatment Effect Heterogeneity in Theory and Practice," Econometric Society 2004 North American Winter Meetings 186, Econometric Society.
    Other versions:
  9. James Heckman & Neil Hohmann & Jeffrey Smith & Michael Khoo, 2000. "Substitution And Dropout Bias In Social Experiments: A Study Of An Influential Social Experiment," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 651-694, May. [Downloadable!] (restricted)
    Other versions:
  10. Stillman, Steven & McKenzie, David & Gibson, John, 2007. "Migration and mental health : evidence from a natural experiment," Policy Research Working Paper Series 4138, The World Bank. [Downloadable!]
    Other versions:
  11. Adams, Richard H, Jr, 1989. "Worker Remittances and Inequality in Rural Egypt," Economic Development and Cultural Change, University of Chicago Press, vol. 38(1), pages 45-71, October.
  12. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September. [Downloadable!] (restricted)
  13. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September. [Downloadable!] (restricted)
  14. Richard P.C. Brown & Gareth Leeves, 2007. "Impacts of International Migration and Remittances," Discussion Papers Series 347, School of Economics, University of Queensland, Australia. [Downloadable!]
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