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How Important is Selection? Experimental vs Non-experimental Measures of the Income Gains of Migration

Author

Listed:
  • David McKenzie

    () (The World Bank)

  • John Gibson

    () (University of Waikato)

  • Steven Stillman

    () (Motu Economic and Public Policy)

Abstract

Measuring the gain in income from migration is complicated by non-random selection of migrants from the general population, making it hard to obtain an appropriate comparison group of non-migrants. This paper uses a migrant lottery to overcome this problem, providing an experimental measure of the income gains from migration. New Zealand allows a quota of Tongans to immigrate each year with a lottery used to choose amongst the excess number of applicants. A unique survey conducted by the authors in these two countries allows experimental estimates of the income gains from migration to be obtained by comparing the incomes of migrants to those who applied to migrate, but whose names were not drawn in the lottery, after allowing for the effect of noncompliance among some of those whose names were drawn. We also conducted a survey of individuals who did not apply for the lottery. Comparing this non-applicant group to the migrants enables assessment of the degree to which non-experimental methods can provide an unbiased estimate of the income gains from migration. We find evidence of migrants being positively selected in terms of both observed and unobserved skills. As a result, non-experimental methods are found to overstate the gains from migration, by 9 to 82 percent. A good instrumental variable works best, while difference-in-differences and bias-adjusted propensity-score matching also perform comparatively well.

Suggested Citation

  • David McKenzie & John Gibson & Steven Stillman, 2006. "How Important is Selection? Experimental vs Non-experimental Measures of the Income Gains of Migration," Working Papers 06_02, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:06_02
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    File URL: http://motu-www.motu.org.nz/wpapers/06_02.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2014. "Tradable immigration quotas," Journal of Public Economics, Elsevier, vol. 115(C), pages 94-108.
    2. Clemens, Michael A. & Montenegro, Claudio E. & Pritchett, Lant, 2008. "The place premium : wage differences for identical workers across the US border," Policy Research Working Paper Series 4671, The World Bank.
    3. Michael Clemens & Erwin Tiongson, 2012. "Split Decisions: Family finance when a policy discontinuity allocates overseas work," CReAM Discussion Paper Series 1234, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    4. Valerie Mueller & Abusaleh Shariff, 2011. "Preliminary Evidence On Internal Migration, Remittances, And Teen Schooling In India," Contemporary Economic Policy, Western Economic Association International, vol. 29(2), pages 207-217, April.
    5. Sylvie Démurger & Li Shi, 2012. "Migration, Remittances and Rural Employment Patterns : Evidence from China," Working Papers 1230, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    6. Mario Liebensteiner, 2014. "Estimating the Income Gain of Seasonal Labor Migration," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 667-680, November.
    7. Isabelle Chort, 2012. "New insights into the selection process of Mexican migrants.What can we learn from discrepancies between intentions to migrate and actual moves to the U.S.?," PSE Working Papers halshs-00689467, HAL.
    8. Fafchamps, Marcel, 2012. "Reprint of development, agglomeration, and the organization of work," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 765-778.
    9. Boman, Anders, 2012. "Employment effects of extended geographic scope in job search," Labour Economics, Elsevier, vol. 19(5), pages 643-652.
    10. Isabelle Chort, 2012. "New insights into the selection process of Mexican migrants.What can we learn from discrepancies between intentions to migrate and actual moves to the U.S.?," Working Papers halshs-00689467, HAL.
    11. Beatriz Vargas Urrutia, 2013. "Retornos a la educación y migración rural-urbana en Colombia," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, December.

    More about this item

    Keywords

    Migration; Selection; Natural Experiment;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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