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Immigration Policy and Remittance Behaviour

Author

Listed:
  • Piracha, Matloob

    () (University of Kent)

  • Tani, Massimiliano

    () (University of New South Wales)

  • Tchuente, Guy

    () (University of Kent)

Abstract

This paper analyses the impact of a change in Australia's immigration policy, introduced in the mid-1990s, on migrants' remittance behaviour. More precisely, we compare the remittance behaviour of two cohorts who entered Australia before and after the policy change, which consists of stricter entry requirements. Our empirical strategy uses conditional difference-in-differences in the presence of interactive fixed-effects. We first show that Bai's (2009) least squares estimator and conditional difference-in-differences are biased if used on their own. We then derive conditions that are required to obtain a consistent estimator using a combination of conditional difference-in-differences and Bai's (2009) least squares estimator. The results indicate that those who entered under more stringent conditions – the second cohort – have a higher probability to remit than those in the first cohort, though the policy change has no discernible effect on the level of remittances.

Suggested Citation

  • Piracha, Matloob & Tani, Massimiliano & Tchuente, Guy, 2017. "Immigration Policy and Remittance Behaviour," IZA Discussion Papers 10927, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10927
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    References listed on IDEAS

    as
    1. Albert Bollard & David McKenzie & Melanie Morten & Hillel Rapoport, 2011. "Remittances and the Brain Drain Revisited: The Microdata Show That More Educated Migrants Remit More," World Bank Economic Review, World Bank Group, vol. 25(1), pages 132-156, May.
    2. Laurent Gobillon & Thierry Magnac, 2016. "Regional Policy Evaluation: Interactive Fixed Effects and Synthetic Controls," The Review of Economics and Statistics, MIT Press, pages 535-551.
    3. M. Piracha & Y. Zhu, 2012. "Precautionary savings by natives and immigrants in Germany," Applied Economics, Taylor & Francis Journals, vol. 44(21), pages 2767-2776, July.
    4. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
    5. Deborah A. Cobb-Clark, 2003. "Public policy and the labor market adjustment of new immigrants to Australia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(4), pages 655-681, November.
    6. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    7. Ouyang, Min & Peng, Yulei, 2015. "The treatment-effect estimation: A case study of the 2008 economic stimulus package of China," Journal of Econometrics, Elsevier, vol. 188(2), pages 545-557.
    8. Catia Batista & Janis Umblijs, 2016. "Do migrants send remittances as a way of self-insurance?," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 108-130.
    9. Cheng Hsiao & H. Steve Ching & Shui Ki Wan, 2012. "A Panel Data Approach For Program Evaluation: Measuring The Benefits Of Political And Economic Integration Of Hong Kong With Mainland China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(5), pages 705-740, August.
    10. Jushan Bai, 2003. "Inferential Theory for Factor Models of Large Dimensions," Econometrica, Econometric Society, vol. 71(1), pages 135-171, January.
    11. Ahn, Seung C. & Lee, Young H. & Schmidt, Peter, 2013. "Panel data models with multiple time-varying individual effects," Journal of Econometrics, Elsevier, vol. 174(1), pages 1-14.
    12. Stéphane Mahuteau & P.N. (Raja) Junankar, 2008. "Do Migrants get Good Jobs in Australia? The Role of Ethnic Networks in Job Search," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages 115-130, September.
    13. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 1-19.
    14. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 227-254, June.
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    More about this item

    Keywords

    immigration; treatment effect; difference-in-differences;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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