Returns to Low-Skilled International Migration: Evidence from the Bangladesh-Malaysia Migration Lottery Program

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Policy Research Working Paper 9165 Many economists believe that the returns to migration are high. However, credible experimental estimates of the benefits of migration are rare, particularly for low-skilled international migrants and their families. This paper studies a natural experiment in Bangladesh, where low-skilled male migrant workers to Malaysia were selected via a large-scale lottery program. This study tracked the households of lottery applicants and surveyed 3,512 lottery winners and losers. Five years after the lottery, 76 percent of the winners had migrated internationally compared with only 19 percent of the lottery losers. Using the lottery outcome as an instrument, the paper finds that the government intermediated migration increased the incomes of migrants by over 200 percent and their household per capita consumption by 22 percent. Furthermore, low-skilled international migration leads to large improvements in a wide array of household socioeconomic outcomes, including female involvement in key household decisions. Such large gains arise, at least in part, due to lower costs of government intermediation.

Toward Safer and More Productive Migration for South Asia

“…Global evidence on this question tends to find no effect of labor migration on the labor supply of males staying behind, but negative effects on the labor supply of females (Acosta 2006; Amuedo-Dorantes and Pozo 2006; Bossavie and Ozden 2022; Mendola and Carletto 2012). In Bangladesh, no adverse effects on the labor supply of other household members, including females, has been shown in the context of the G2G program with Malaysia (Mobarak, Sharif, and Shrestha 2020). In addition, positive effects on female involvement in decision-making have been found.…”

“…In Nepal, estimated effects are heterogeneous, but overall effects on school enrollment are positive Shrestha 2017b). In Bangladesh, the effects of outmigration on children's educational and nutritional outcomes through the Malaysia-Bangladesh government-to-government (G2G) program have also been positive overall (Mobarak, Sharif, and Shrestha 2020). Receiving remittances from overseas may reduce the labor supply of other household members at home, particularly of females, through an income effect.…”

“…Job fairs on employment overseas have also been shown to be effective in changing individual perceptions about the overseas labor market (Beam 2016). Well-managed G2G migration programs, such as the seasonal migration between Tonga and New Zealand and the Bangladesh-Malaysia G2G program, have been shown to have very large positive effects on the welfare of migrants and their households Mobarak, Sharif, and Shrestha 2020). Financial literacy programs, when targeted to both migrants and their household members, have been found to be effective in increasing savings from migration .…”

Temporary Migration for Long-Term Investment

“…On the other hand, a rise in repatriated savings may contribute to more financing of entrepreneurial activities. Mobarak, Sharif, and Shrestha (2020), who examined the outcomes for Bangladeshi agricultural workers who went to Malaysia under a specific government-mediated migration program, document a negative short-run net effect of emigration on entrepreneurial activity while migrants are abroad. Anelli, Basso, Ippedico, and Peri (2020) present similar evidence for emigration from Italy.…”

How residence permits affect the labor market attachment of foreign workers: Evidence from a migration lottery in Liechtenstein

“…Diversity Visa lottery for Ethopians and finds that their migration to the U.S. increases welfare (in particular consumer expenditure) of the families left behind in Ethiopia. Mobarak et al (2020) examine a visa lottery for low-skilled workers from Bangladesh intending to work in the palm-oil industry in Malaysia; and find that migration leads not only to a substantial income rise among migrants, but also to an increase in the household consumption of the family left behind.…”