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Foreign Aid and Migration

Author

Listed:
  • Fuchs, Andreas
  • Gröger, André
  • Heidland, Tobias
  • Wellner, Lukas

Abstract

Wealthy nations increasingly fund foreign aid to address the 'root causes' of migration despite a lack of scientific evidence about its effectiveness. Combining georeferenced World Bank project data (2008–2019) with migration preferences of one million individuals and bilateral flows, we identify the causal effects of aid using event studies and instrumental variables. In the short term, aid raises optimism and institutional trust, reducing migration preferences and asylum flows. In the longer term, aid raises incomes, increasing regular migration, consistent with the 'mobility transition.' Aid can shape migration, but redirects rather than reduces it, with effects reversing over time.

Suggested Citation

  • Fuchs, Andreas & Gröger, André & Heidland, Tobias & Wellner, Lukas, 2024. "Foreign Aid and Migration," CEPR Discussion Papers 19332, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19332
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    File URL: https://cepr.org/publications/DP19332
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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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