Impact of internal migration on labor market outcomes: Evidence from Ethiopia

The movement of people is considered a means of labor market adjustment and reducing fragmentation. This study contributes to the literature by examining the causal effect of internal migration on various labor market outcomes and job quality and showing the role of education in shaping their relationship in a war-affected and developing country context. By using the 2013 and 2021 Ethiopian Labor Force and Migration Surveys (LFMS) and an instrumental variable approach (IV), this study finds a significant and positive effect of internal migration on employment probability; however, the employment gains do not consistently translate into better job quality indicators such as wages, contract types and working hours for all migrants. Importantly, education has a critical role in enhancing the positive influence of internal migration on job quality indicators. The results reveal educated migrants earn significantly higher wages, are more likely to hold permanent contracts and work fewer hours. The disaggregated results further reveal that permanent employment opportunities are limited and mainly benefit male migrants in a few regions, while female migrants work longer hours. The findings also show that the employment effect of internal migration is stronger in urban areas and among male migrants. Overall, the results suggest the necessity of labor market policies that go beyond enhancing the mobility of individuals and integrate education and skills development strategies with migration policy, empower women, and foster inclusive urban labor market institutions.