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Aid and Migration: Substitutes or Complements?

  • Berthélemy, Jean-Claude
  • Beuran, Monica
  • Maurel, Mathilde

Summary This paper investigates the impact of aid on migration and identifies two channels. Bilateral aid influences migration by enhancing the information about labor market conditions in the destination country (attraction effect). Total aid correlates with migration through increasing expenditure financing and hence, wages in countries of origin (push effect). We compute the critical level of income above which emigration and income are substitutes, which is about US $7,300 per capita in PPP 2000 prices, for example, Brazil or Russia. We argue that for countries below this threshold, there is a trade-off between aid and migration policies. A tightening of the migration policy is equivalent to a reduction of the level of aid by about 24%. A comparison of skilled and unskilled migrations shows that the former are more sensitive to the attraction effect than the latter.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 10 (October)
Pages: 1589-1599

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:10:p:1589-1599
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  1. Sajal Lahiri & Pascalis Raimondos-Møller, 1999. "Lobbying by Ethnic Groups and Aid Allocation," EPRU Working Paper Series 99-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Oct 2003.
  2. Timothy Hatton & Jeffery Williamson, 2002. "What Fundamentals Drive World Migration?," CEPR Discussion Papers 458, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  4. Ralph Rotte & Michael Vogler, 2000. "The effects of development on migration: Theoretical issues and new empirical evidence," Journal of Population Economics, Springer, vol. 13(3), pages 485-508.
  5. David Karemera & Victor Iwuagwu Oguledo & Bobby Davis, 2000. "A gravity model analysis of international migration to North America," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1745-1755.
  6. Hatton, Timothy J. & Williamson, Jeffrey G., 1998. "The Age of Mass Migration: Causes and Economic Impact," OUP Catalogue, Oxford University Press, number 9780195116519.
  7. Faini, Riccardo & Venturini, Alessandra, 1993. "Trade, aid and migrations: Some basic policy issues," European Economic Review, Elsevier, vol. 37(2-3), pages 435-442, April.
  8. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
  9. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
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