[STBI-04-05-2017] Easy come, easy go? economic shock, labor migration and the family left behind

Presenter: Ph.D André Gröger (Goethe University Frankfurt)

Email: agroeger@wiwi.uni- frankfurt.de

Time: 10:00 am 4th May 2017

Venue: Room H001. 1A Hoang Dieu Street. Phu Nhuan Districh. Ho Chi Minh city

Abstract:

This paper studies the impact of economic shocks to migrant incomes abroad on their remittance-dependent families left behind in Vietnam. Relying on destination- and skill-specific variation in the shock intensities generated by the Great Recession in destination countries, I adopt a quasi-experimental approach using a panel dataset of migrant households in Vietnam. The results show that the shock leads to heterogeneous household responses at the origin. Low-skilled households are negatively affected and cope by increasing labor supply at home and sending more migrants to foreign destinations, while reducing the number of domestic migrants. High-skilled ones remain largely unaffected. I provide a theoretical framework, which rationalizes the heterogeneity in household responses by the relative magnitudes of the income and substitution effects caused by the shock. The findings contribute to different literature in development and migration by providing evidence of a trade-off between domestic and foreign migration strategies in developing countries, highlighting migrant households’ shock coping mechanisms, and documenting the risks attached to remittance dependence at origin.

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