Labour Market Responses to Immigration: Evidence from Internal Migration Driven by Weather Shocks

Abstract

We study the labour market impact of internal migration in Indonesia by instrumenting migrant flows with rainfall shocks at the origin area. Estimates reveal that a one percentage point increase in the share of migrants decreases income by 0.97% and reduces employment by 0.24 percentage points. These effects are different across sectors: employment reductions are concentrated in the formal sector, while income reduction occurs in the informal sector. Negative consequences are most pronounced for low‐skilled natives, even though migrants are systematically highly skilled. We suggest that the two‐sector nature of the labour market may explain this pattern.

Internal migration and crime in Brazil

“…Studies investigating the impact of internal migration on local labour markets found negative effects of migration on wages and employment of residents at destinations (Boustan et al 2010;Kleemans and Magruder 2017). This could lead to higher rates of crime committed by residents who lose their jobs or receive lower wages.…”

“…This is not very informative for the Brazilian case, because the informal labour market is very large. Kleemans and Magruder (2017) document that in a developing country with a large informal sector, the impact of rural to urban migration is different for formal and informal sector workers.…”

“…Consequently, an influx of internal migrants may result in unemployment either of residents or of migrants. The labour market effects of migration have been a particular concern in the literature on rural-urban migration (Harris and Todaro 1970;Todaro 1971), and recent empirical evidence confirms that migration into urban areas does indeed give rise to unemployment and lower wages (Kleemans and Magruder 2017). In turn, these labour market effects may lead to higher levels of crime, an association that has also been independently confirmed in the context of the USA (Gould et al 2002;Grogger and Willis 1998) as well as Brazil (Dix-Carneiro et al 2017).…”

“…In the US context, the literature has found that the arrival of internal migrants has no effect on local wages in the destination cities in the USA, but reduced the hours worked and induced out-migration among residents (Boustan et al 2010). The only evidence on this topic in a developing country context comes from Kleemans and Magruder (2017). They study the effect of internal migration on local labour markets in Indonesia and find that in-migration increases unemployment and lowers wages for residents in the destination areas.…”

The Impact of Climate Change on Risk and Return in Indian Agriculture

“…Taraz (2018) concludes that Indian farmers can adapt to moderately hot temperatures, but not to episodes of extreme heat. Finally, the results of a number of studies suggest that climate change may affect labor supply in developing countries, due to migration (Cattaneo and Peri, 2016;Henderson et al, 2017;Jessoe et al, 2018;Kleemans and Magruder, 2018), human capital accumulation (Garg et al, 2020), and sectoral mobility (Colmer, 2018;Chaijaroen, 2019). Lobell et al, 2011;Knox et al, 2012;Challinor et al, 2014;Chen et al, 2016), some focusing specifically on India (Guiteras, 2009;Burgess et al, 2017;Hari et al, 2018;Taraz, 2018).…”