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Distortions in the International Migrant Labor Market: Evidence from Filipino Migration and Wage Responses to Destination Country Economic Shocks

Author

Listed:
  • David McKenzie

    (Development Research Group, World Bank and BREAD, CEPR, CReAM and IZA)

  • Caroline Theoharides

    (Department of Economics and Ford School of Public Policy, University of Michigan)

  • Dean Yang

    (Department of Economics and Ford School of Public Policy, University of Michigan, NBER, and BREAD)

Abstract

We use an original panel dataset of migrant departures from the Philippines to identify the responsiveness of migrant numbers and wages to GDP shocks in destination countries. We find a large significant elasticity of migrant numbers to GDP shocks at destination, but no significant wage response. This is consistent with binding minimum wages for migrant labor. This result implies that labor market imperfections that make international migration attractive also make migrant flows more sensitive to global business cycles. Difference-in-differences analysis of a minimum wage change for maids confirms that minimum wages bind and demand is price sensitive without these distortions.

Suggested Citation

  • David McKenzie & Caroline Theoharides & Dean Yang, 2012. "Distortions in the International Migrant Labor Market: Evidence from Filipino Migration and Wage Responses to Destination Country Economic Shocks," RFBerlin Discussion Paper Series 1209, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:1209
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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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