Does foreign aid volatility increase international migration?

Abstract

Scholars have long debated the relationship between foreign aid and international migration, with some arguing that foreign aid can deter emigrants and others contending that aid enables them. We contribute to this discussion by exploring whether negative aid shocks affect migration patterns. We theorize that these shocks, which occur when there are large and abrupt decreases in aid disbursement to a given country, lead individuals in aid-recipient countries to emigrate. Such shocks lead to reductions in the provision of public and community services that are funded by aid. These reductions in turn force individuals who depend on these services to seek better lives abroad. We expect this effect to be especially evident among low-skilled individuals, who are most reliant on the services that are supported by foreign aid. We use country-level panel data to test hypotheses derived from these arguments and we find, first, that negative aid shocks are accompanied by heightened emigration rates and, second, that this effect is driven by the emigration of relatively unskilled individuals.

The VUCA World of Arab and Moldovan Migrants in Romania

“…At the moment though, global migration happens in a context of VUCA. Gamso and Yuldashev (2021) demonstrate that volatility in foreign aid leads to an increase of international migration. More than that, though, a higher impact upon international migration is due to the economic and political volatility in the sending country (Agadjanian & Gorina, 2019).…”

Race, capital and the British migration–development nexus

“…Such a comparison has not yet been conducted in the varied slate of scholarly work on the nexus. Most who examine the ‘aid reduces migration’ argument take an empirical approach, focusing on the correlation between aid and migration levels (Clemens and Postel, 2018; Clist and Restelli, 2021; Gamso et al, 2021; Gamso and Yuldashev, 2018; Martin and Taylor, 1996 Mauro and Rainer, 2021). Such analysis tends to imply that migration is undesirable (De Haas, 2012); it is therefore not the concern of this article because I reject normative assumptions that migration should be reduced.…”

Introduction to the special issue: In memoriam Stephen Knack

“…Another aspect of aid that has received considerable attention is its volatility and the potential negative effects of that volatility (specifically large, sudden drops in aid flows). Gamso et al (2021) examine how this intersects with another important topic in studies of foreign aid, the link between aid and migration. The impact of aid on migration has been hotly debated.…”