Accounting for Selectivity and Duration-Dependent Heterogeneity When Estimating the Impact of Emigration on Incomes and Poverty in Sending Areas

28 Pages Posted: 20 Apr 2016  

John Gibson

University of Waikato; Motu Economic and Public Policy Research

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Steven Stillman

Free University of Bozen-Bolzano; IZA Institute of Labor Economics

Date Written: April 1, 2010

Abstract

The impacts of international emigration and remittances on incomes and poverty in sending areas are increasingly studied with household survey data. But comparing households with and without emigrants is complicated by a triple-selectivity problem: first, households self-select into emigration; second, in some emigrant households everyone moves while others leave members behind; and third, some emigrants choose to return to the origin country. Allowing for duration-dependent heterogeneity introduces a fourth form of selectivity -- one must now worry not just about whether households migrate, but also when they do so. This paper clearly sets out these selectivity issues and their implications for existing migration studies, and then addresses them by using survey data designed specifically to take advantage of a randomized lottery that determines which applicants to the over-subscribed Samoan Quota may immigrate to New Zealand. The analysis compares incomes and poverty rates among left behind members in households in Samoa that sent Samoan Quota emigrants with those for members of similar households that were unsuccessful in the lottery. Policy rules control who can accompany the principal migrant, providing an instrument to address the second selectivity problem, while differences among migrants in which year their ballot was selected allow for estimation of duration effects. The authors find that migration reduced poverty among former household members, but they also find suggestive evidence that this effect may be short-lived as both remittances and agricultural income are negatively related to the duration that the migrant has been abroad.

Keywords: Population Policies, Small Area Estimation Poverty Mapping, Anthropology, Housing & Human Habitats, Remittances

Suggested Citation

Gibson, John and McKenzie, David J. and Stillman, Steven, Accounting for Selectivity and Duration-Dependent Heterogeneity When Estimating the Impact of Emigration on Incomes and Poverty in Sending Areas (April 1, 2010). World Bank Policy Research Working Paper No. 5268. Available at SSRN: https://ssrn.com/abstract=1589282

John Gibson

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Motu Economic and Public Policy Research

19 Milne Terrace
Island Bay
Wellington, 6002
New Zealand

David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Steven Stillman

Free University of Bozen-Bolzano ( email )

Via Sernesi 1
39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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