Returns to Migration of Filipinos

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 24 May 2013
9.30am–11.00am

Venue

Seminar Room 1 Stanner Building 37 Crawford School

Speaker

Michael Reyes Cabalfin

Contacts

Robert Sparrow
61253885

Theory suggests that migration is primarily motivated by income gain. Consistent with this, income differentials between top destination countries of Filipino migrants and the Philippines are high and increasing, and the shares of Filipino migrants rise with the income level of destination countries. However,estimates of gains from migration may be biased due to migration selection in observed and unobserved characteristics. While a minority of Filipinos have higher education, most Filipino migrants to the OECD have higher education. This suggests higher returns to education in the OECD and overestimation of standard estimates of gains from migration. The greater inequality in the Philippines relative to countries like the United States, Australia, Canada and Japan may be driving the less productive to migrate into more egalitarian economies. On the other hand, the rising inequality in the United States and Australia is allowing Filipino migrants to earn above average and protecting their incomes. Conversely, decreasing inequalities in Canada and Japan threaten to tax migrant incomes attracting the less productive.

Micro-econometric analysis of survey data using propensity score matching reveals that migrants are only slightly negatively selected from the local labor force, in terms of observed characteristics. Accounting for time-varying unobserved heterogeneity using three-stage least squares regression also suggests that migration selection based on unobserved characteristics is not much of a problem. Estimates of return on migration by country of destination confirms significant and variably substantial gains from migration to Canada, Italy and the United States. However, these estimates indicate no significant migration selection, except for Hong-Kong where migrants negatively select.

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