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

41 Pages Posted: 28 Apr 2012

See all articles by David J. McKenzie

David J. McKenzie

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

Caroline Barclay Theoharides

University of Michigan at Ann Arbor

Dean Yang

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER); University of Michigan at Ann Arbor - Department of Economics

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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.

Keywords: international migration, migrant demand, labor output elasticity, minimum wages

JEL Classification: O12, J23, F22

Suggested Citation

McKenzie, David John and Theoharides, Caroline Barclay and Yang, Dean, Distortions in the International Migrant Labor Market: Evidence from Filipino Migration and Wage Responses to Destination Country Economic Shocks. IZA Discussion Paper No. 6498, Available at SSRN: https://ssrn.com/abstract=2047284

David John McKenzie (Contact Author)

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

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Caroline Barclay Theoharides

University of Michigan at Ann Arbor ( email )

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Dean Yang

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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National Bureau of Economic Research (NBER)

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University of Michigan at Ann Arbor - Department of Economics

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