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Essays on the Economics of International Migration and Return

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Essays on the Economics of International Migration and Return Essays on the Economics of International Migration and Return by Paolo Martin F. Abarcar A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy (Public Policy and Economics) in The University of Michigan 2016 Doctoral Committee: Professor Dean C. Yang, Chair Assistant Professor Achyuta R. Adhvaryu Professor Brian A. Jacob Professor Jeffrey A. Smith c Paolo Martin F. Abarcar 2016 All Rights Reserved For Hyejin and my parents ii ACKNOWLEDGEMENTS I would like to acknowledge the support of people who made the completion of this dissertation possible. First and foremost, I thank my committee members. I am especially grateful to Dean Yang whose guidance at all stages of my research was invaluable; he knew when to impart encouragement when it was needed. I thank Jeff Smith. No one reads drafts as meticulously as Jeff and his comments substantially improved the final product. Ach Adhvaryu and Brian Jacob often made themselves available to help me think through details, which was crucial to moving forward. I could not have formed a better team to support my research. It was the friendship of fellow graduate students that sustained me throughout graduate school. I am grateful to Chris Boehm and Nitya Pandalai-Nayar. Second year was a particularly tough time for me, but they kept me sane through their dinner parties and the \love shack". Prachi Jain had weekly coffee with me, allowing me to share day-to-day joys and frustrations, plus the occasional gossip. These were cathartic and kept me calm. Minjoon Lee was always a good neighbor to me. I thank him for helping me work through microeconomic theory, and for being key to my meeting my wife. I received excellent research assistance for my first chapter from Carlo Robert Mercado, Katherine Peralta, Donald Bertulfo, Jan Fredrick Cruz, Samantha Coron- ado, Louise Oblena, Christopher Ordonez, and Ricky Guzman. My third chapter is joint work with Caroline Theoharides, who was quick to respond, despite her busy schedule. The Department of Economics and the Rackham Graduate School at the iii University of Michigan provided generous funding and support for my research. My interest in studying international migration comes from my own experience as an immigrant, but also owes to Michael Clemens, who convinced me that it is a topic worth studying. Back when I was a new immigrant to the U.S., Michael opened doors for me by hiring me as his research assistant at the Center for Global Development. His passion for the topic was what led me to graduate school. My deepest thanks go to my wife, Hyejin, and my parents, Carol and Edgar. No words can fully express how their love and encouragement has meant to me. Both my parents sacrificed careers in the Philippines to move to the U.S. so that my siblings and I can have better opportunities. The completion of this dissertation, in a way, is their success. iv TABLE OF CONTENTS DEDICATION :::::::::::::::::::::::::::::::::: ii ACKNOWLEDGEMENTS :::::::::::::::::::::::::: iii LIST OF FIGURES ::::::::::::::::::::::::::::::: vii LIST OF TABLES :::::::::::::::::::::::::::::::: viii LIST OF APPENDICES :::::::::::::::::::::::::::: x ABSTRACT ::::::::::::::::::::::::::::::::::: xi CHAPTER I. Do Employers Value Return Migrants? An Experiment on the Returns to Foreign Work Experience ............1 1.1 Introduction . .1 1.2 Background . .4 1.2.1 The Wage Premium to Return Migrants . .5 1.2.2 Resume-Audit Studies in Labor Economics . .6 1.2.3 The Philippines as an Excellent Setting . .8 1.3 Experimental Design . .9 1.3.1 Creating a Bank of Work Experiences . 10 1.3.2 Choosing Job Ads and Generating Fictitious Resumes 10 1.3.3 Random Assignment of Foreign Experience . 12 1.3.4 Responding to Job Ads and Recording Callbacks . 13 1.4 Summary Statistics . 14 1.5 Results . 15 1.6 Mechanisms . 20 1.6.1 Negative Signaling . 20 1.6.2 High Expected Wages . 24 1.6.3 Overqualification . 26 1.6.4 Low Expected Tenure . 27 1.6.5 Location-Specific Human Capital . 27 v 1.7 Discussions with Employers . 29 1.8 Conclusion . 32 II. The Return Motivations of Legal Permanent Migrants: Evi- dence from Exchange Rate Shocks and Immigrants in Australia 52 2.1 Introduction . 52 2.2 Theoretical Framework . 56 2.2.1 Lifecycle Consumers . 57 2.2.2 Target Earners . 58 2.3 The Asian Financial Crisis of 1997 and its Impact on Australia 60 2.4 Data and Descriptive Statistics . 62 2.5 Empirical Results . 65 2.5.1 Main Result . 66 2.5.2 Differential Effects by Intention to Return . 67 2.5.3 Are Exchange Rate Shocks Merely a Proxy for Other Macroeconomic Variables? . 68 2.6 Robustness Checks . 70 2.7 Conclusion . 74 III. The International Migration of Healthcare Professionals and the Supply of Educated Individuals Left Behind ........ 92 3.1 Introduction . 92 3.2 Background . 95 3.2.1 The Philippines and Nurse Migration . 95 3.2.2 Nurse Migration to the U.S. in the 2000s . 96 3.3 Data . 98 3.4 Empirical Strategy . 100 3.5 Results . 102 3.5.1 Results from the Basic Difference-in-difference . 102 3.5.2 Results from Exploiting the 2007 Policy Change . 105 3.6 Discussion . 106 APPENDICES :::::::::::::::::::::::::::::::::: 117 BIBLIOGRAPHY :::::::::::::::::::::::::::::::: 130 vi LIST OF FIGURES Figure 1.1 A Global Mapping of the Estimated Stock of Overseas Filipinos (Top 10 Destination Countries) . 36 1.2 Callback Rate By Resume Treatment Status . 37 1.3 Callback Rate vs. Length of Foreign Experience . 38 1.4 Kernel Density Plot of the Wage Residuals of Migrant vs. Non- migrant Households . 39 1.5 Coefficient Estimates By Years of Foreign Experience . 40 1.6 Fewer Callbacks for Resumes with Foreign Experience at all Expected Wage Levels . 41 2.1 Foreign Exchange Rates of the Top 15 Home Countries of Australian Immigrants . 77 3.1 Enrollment in Tertiary Education (2001-2012) By Discipline . 108 3.2 Graduation in Tertiary Education (2001-2012) By Discipline . 109 3.3 Number of Departures of Nurse and Other Migrants (2000-2012) . 109 3.4 Pre-trends in the Nurse Migration Rate Across Provinces by Base Share Quartile . 110 3.5 Pre-trends in the Nurse Enrollment Rate Across Provinces by Base Share Quartile . 110 vii LIST OF TABLES Table 1.1 Top 10 Countries of Destination of Permanent, Temporary, and Ir- regular Migrants in 2012 . 42 1.2 Distribution of Overseas Filipino Workers (in percent) . 43 1.3 Countries of Foreign Experience of Resumes in the Audit Study . 43 1.4 Summary Statistics . 44 1.5 Randomization Tests . 46 1.6 The Effect of Foreign Experience on Callback Rates . 47 1.7 The Effect of Having Foreign Experience on Callback Rates By Firm Industry . 48 1.8 The Effect of Foreign Experience on Callback Rates By Quality of Resume . 49 1.9 The Effect of Cover Letters . 50 1.10 The Effect of Foreign Experience at the Extensive and Intensive Margins 50 1.11 Comparing Treatment Effects of the Main and Sub Experiment . 51 2.1 Descriptive Statistics for the Sample of Immigrants . 78 2.2 The Top 15 Source Countries with Mean Exchange Rate Changes Experienced . 81 2.3 Reasons for Sample Attrition . 82 2.4 The Effect of Exchange Rate Shocks on Permanent Return Migration 83 2.5 The Effect of Exchange Rate Shocks by Intention of Return . 84 2.6 Are the Exchange Rate Shocks Merely Capturing the Effect of GDP per Capita Growth and Changes in Unemployment in Home Countries? 85 2.7 Are the Exchange Rate Shocks Merely Capturing the Effect of Changes in the General Price Level in Home Countries? . 86 2.8 The Effect of Future Exchange Rate Shocks on Permanent Return Migration in the Prior Period . 87 2.9 Are the Effects of the Exchange Rate Shocks Contemporaneous? . 88 2.10 The Effect of Exchange Rate Shocks on Permanent Return Migration for the Trimmed Sample . 89 2.11 Expect to Emigrate to Another Country? . 90 2.12 The Correlation Between the Attrition Variable and the Exchange Rate Shocks . 91 viii 3.1 Descriptive Statistics . 111 3.2 Effect of Nurse Migration on Tertiary School Enrollment and Grad- uation Rates . 112 3.3 The Lagged Effect of Nurse Migration on Tertiary Enrollment and Graduation Rates . 113 3.4 Effect of Nurse Migration on Tertiary School Enrollment and Grad- uation Rates (in birth province) . 114 3.5 Robustness Checks for the Effect of Nurse Migration on Tertiary School Enrollment . 115 3.6 The Effect of the 2007 Policy on Nurse Migration Rates and Enrollment116 A.1 List of Colleges and Universities . 119 A.2 Robustness Check of the Effect of Foreign Experience on Callback Rates . 120 A.3 The Effects of Foreign Experience on Callback Rates, By Each Year Spent Abroad . 121 A.4 A Tabulation of Recruiter Responses to the Interview . 122 C.1 Effect of Nurse Migration on Tertiary School Enrollment and Grad- uation Rates (without including province specific linear time trends) 128 C.2 The Effect of the 2007 Policy on Nurse Migration Rates and Enrollment129 ix LIST OF APPENDICES Appendix A. Chapter 1 Appendices . 118 B. Chapter 2 Appendices . 124 C. Chapter 3 Appendices . 127 x ABSTRACT Essays on the Economics of International Migration and Return by Paolo Martin F. Abarcar Chair: Dean C. Yang International migration and return are important channels through which individ- uals from migrant-sending countries stand to benefit from the world economy. Yet to date, the consequences of such flows and the reasons behind why people move from one country to another remain poorly understood. This dissertation examines three interrelated questions concerning the economics of why people go abroad and why they might return, and then looks at the consequences of such decisions.
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