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American Economic Journal: Applied Economics: Vol. 6 No. 2 (April 2014)

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

Article Citation

McKenzie, David, Caroline Theoharides, and Dean Yang. 2014. "Distortions in the International Migrant Labor Market: Evidence from Filipino Migration and Wage Responses to Destination Country Economic Shocks." American Economic Journal: Applied Economics, 6(2): 49-75.

DOI: 10.1257/app.6.2.49

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 response 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.

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Online Appendix (829.97 KB) | Download Data Set (1.32 MB) | Author Disclosure Statement(s) (190.79 KB)

Authors

McKenzie, David (World Bank)
Theoharides, Caroline (U MI)
Yang, Dean (U MI)

JEL Classifications

F22: International Migration
J31: Wage Level and Structure; Wage Differentials
J38: Wages, Compensation, and Labor Costs: Public Policy
J61: Geographic Labor Mobility; Immigrant Workers
O15: Economic Development: Human Resources; Human Development; Income Distribution; Migration

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