The Long-Term Impact of International Migration on Economic Decision-Making: Evidence from a Migration Lottery and Lab-in-the-Field Experiments

44 Pages Posted: 8 Aug 2016

See all articles by John Gibson

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

Halahingano Rohorua

University of Waikato

Steven Stillman

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

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Abstract

We study how migration from a poor to a rich country affects key economic beliefs, preference parameters, and transnational household decision-making efficiency. Our setting is the migration of Tongans to New Zealand through a migration lottery program. In a ten-year follow-up survey of individuals applying for this program we elicit risk and time preferences and pro-market beliefs. We also link migrants and potential migrants to a partner household consisting of family members who would stay behind if they moved. We play lab-in-the-field games designed to measure the degree of intra-family trust and the efficiency of intra-family decision-making. Migration provides a large and permanent positive shock to income, a large change in economic institutions, and a reduction in interactions with partner household members. Despite these changes, we find no significant impacts of migration on risk and time preferences, pro-market beliefs, or in the decision-making efficiency of transnational households. This stability in the face of such a large and life-changing event lends credence to economic models of migration that treat these determinants of decision-making as time-invariant, and contrasts with recent evidence on preference changes after negative shocks.

Keywords: migration, economic beliefs, preferences, household efficiency, transnational household

JEL Classification: O12, F22, D13, D81, P1

Suggested Citation

Gibson, John and McKenzie, David John and Rohorua, Halahingano and Stillman, Steven, The Long-Term Impact of International Migration on Economic Decision-Making: Evidence from a Migration Lottery and Lab-in-the-Field Experiments. IZA Discussion Paper No. 10110, Available at SSRN: https://ssrn.com/abstract=2819392

John Gibson (Contact Author)

University of Waikato ( email )

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Motu Economic and Public Policy Research

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David John McKenzie

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

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IZA Institute of Labor Economics ( email )

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Halahingano Rohorua

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Steven Stillman

Free University of Bozen-Bolzano ( email )

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39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

IZA Institute of Labor Economics

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

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