Natural experiment evidence on whether selection bias overstated the gains from migration

Gibson, John and McKenzie, David and Rohorua, Halahingano and Stillman, Steven (2006) Natural experiment evidence on whether selection bias overstated the gains from migration. UNSPECIFIED.

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Abstract

Migration from developing to developed countries and the resulting remittance flows are emerging as key development policies. Restrictions on international migration may have larger welfare costs than the more widely studied restrictions on international trade (World Bank, 2005). Measuring the gains from migration requires estimating what workers in developing countries could earn in rich countries. These estimates may be affected by selection bias, with differences in earnings for migrants and non-migrants reflecting unobserved differences in ability, skills, and motivation, rather than the act of moving itself. We use a unique random selection mechanism to overcome this selection problem. This mechanism is based on the Pacific Access Category (PAC) under New Zealand’s immigration policy. The PAC allows a quota of about 70 Tongan families to immigrate each year, with a ballot used to choose amongst the excess number of applicants. Comparing ballot winners and losers provides the only known experimental measure of the income gains from migration. A sample of non-applicants is then compared to the migrant sample to assess whether typically used non-experimental methods provide reliable estimates of the income gains from migration.

Item Type:	Other
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Business and Economics (FBE) > Graduate School of Business
Depositing User:	Mele Katea Paea
Date Deposited:	05 Jun 2020 01:03
Last Modified:	05 Jun 2020 01:03
URI:	http://repository.usp.ac.fj/id/eprint/11869

UNSPECIFIED

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