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

Author

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

Abstract

We study how international migrant income prospects affect long-run development in origin areas. We leverage the 1997 Asian Financial Crisis exchange rate shocks in a shift-share identification strategy across Philippine provinces. Initial migrant income shocks are magnified six-fold over time, increasing domestic income, education levels, migrant skills, and high-skilled migration. Remarkably, 74.9 percent of long-run income gains come from domestic rather than migrant income. Trade driven impacts of exchange rate shocks are orthogonal to effects via migrant income. A structural model reveals that 19.7 percent of long-run income gains stem from educational investments. International migration fosters broad economic development in origin communities.

Suggested Citation

  • Gaurav Khanna & Emir Murathanoglu & Caroline Theoharides & Dean Yang, 2026. "Abundance from Abroad: Migrant Income and Long-Run Economic Development," American Economic Review, American Economic Association, vol. 116(4), pages 1540-1577, April.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:4:p:1540-77
    DOI: 10.1257/aer.20241465
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    References listed on IDEAS

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    1. Emily Breza & Cynthia Kinnan, 2021. "Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1447-1497.
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    Cited by:

    1. Caballero, María Esther & Cadena, Brian C. & Kovak, Brian K., 2023. "The international transmission of local economic shocks through migrant networks," Journal of International Economics, Elsevier, vol. 145(C).
    2. Batista, Catia & Costa, David M. & Freitas, Pedro & Lima, Gonçalo & Reis, Ana B., 2025. "What matters for the decision to study abroad? A lab-in-the-field experiment in Cape Verde," Journal of Development Economics, Elsevier, vol. 173(C).
    3. Dodini, Samuel & Lundborg, Petter & Løken, Katrine & Willén, Alexander, 2025. "The Fatal Consequences of Brain Drain," Discussion Paper Series in Economics 9/2025, Norwegian School of Economics, Department of Economics.
    4. Narcisse Cha'ngom & Christoph Deuster & Frédéric Docquier & Joël Machado, 2025. "Selective Migration and Economic Development: A Generalized Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(4), pages 1713-1732, October.
    5. Philippe BOCQUIER & Narcisse CHA’NGOM & Frédéric DOQUIER & Joël MACHADO, 2024. "The within-country distribution of brain drain and brain gain effects: A case study on Senegal," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 90(3), pages 384-411, September.
    6. Buller, David H. & Kleemans, Marieke, 2026. "Effects of emigration on labor markets in migrant origin areas: Evidence from internal migration in Indonesia," Journal of Development Economics, Elsevier, vol. 179(C).
    7. Maertens,Annemie & Siddharth Sharma & Khamis,Melanie, 2024. "Absentee Landlords and Land Tenancy," Policy Research Working Paper Series 10865, The World Bank.
    8. Hal Hill, 2026. "The Philippine economy: no longer the East Asian exception? Revisited," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 63(1), pages 142-167, June.
    9. Kpodar, Kangni & Amir Imam, Patrick, 2024. "How do transaction costs influence remittances?," World Development, Elsevier, vol. 177(C).
    10. Catia Batista & Lara Bohnet & Jules Gazeaud & Julia Seither, 2025. "From destination to origin: experimental evidence on the international spillovers of migrant integration," NOVAFRICA Working Paper Series wp2503, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    11. De Arcangelis, Giuseppe & Fertig, Alexander & Liang, Yuna & Srouji, Peter & Yang, Dean, 2023. "Measuring remittances," Journal of Development Economics, Elsevier, vol. 161(C).
    12. Bossavie, Laurent & Görlach, Joseph-Simon & Özden, Çaglar & Wang, He, 2025. "Temporary migration for long-term investment," Journal of Development Economics, Elsevier, vol. 174(C).
    13. Christian Dustmann & Hyejin Ku & Tetyana Surovtseva, 2024. "Real Exchange Rates and the Earnings of Immigrants," The Economic Journal, Royal Economic Society, vol. 134(657), pages 271-294.
    14. Cinque, Andrea & Gehrke, Esther & Reiners, Lennart, 2026. "Confined to stay: Migration restrictions, natural disasters, and poverty," Journal of Development Economics, Elsevier, vol. 178(C).
    15. repec:unl:unlfep:wp2503 is not listed on IDEAS

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G01 - Financial Economics - - General - - - Financial Crises
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • 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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