Konrad-Zuse-Strasse 1 · D-18057 Rostock · Germany · Tel +49 (0) 3 81 20 81 - 0 · Fax +49 (0) 3 81 20 81 - 202 · www.demogr.mpg.de MPIDR Working Paper WP 2020-016 l April 2020 https://doi.org/10.4054/MPIDR-WP-2020-016 Mobile Phone Network and Migration: Evidence from Myanmar Riccardo Ciacci l [email protected] Jorge García-Hombrados l [email protected] Ayesha Zainudeen l [email protected] This working paper has been approved for release by: Mikko Myrskylä ([email protected]), Head of the Laboratory of Population Health, the Laboratory of Fertility and Well-Being, and the Research Group Labor Demography. © Copyright is held by the authors. Working papers of the Max Planck Institute for Demographic Research receive only limited review. Views or opinions expressed in working papers are attributable to the authors and do not necessarily reflect those of the Institute. Mobile Phone Network and Migration: Evidence from Myanmar* Riccardo Ciacci † Jorge García-Hombrados‡ Ayesha Zainudeen§ May 4, 2020 Abstract This study explores the effect of the expansion of mobile phone signal on migration decisions in Myanmar. The empirical strategy proposed follows Manacorda and Tesei (2019) and Andersen et al.(2011), it uses variation in lightning frequency across space as an instrumental variable for the expansion of mobile phone signal. Our results suggest that longer exposure to mobile phone network decreases migration. Specifi- cally, an increase of 1 s.d. in the time exposed to mobile phone signal diminishes the probability of household members to migrate by 17%. We find empirical evidence suggesting that such findings are driven by the positive effects of access to mobile phone signal on labor market outcomes and on perceived well-being. Keywords: mobile phones, migration, labor market outcomes. JEL codes: F22, O53, L96 *This work was carried out with the aid of a grant from the International Development Research Centre (IDRC), Canada and the Department for International Development (DFID), UK. This project was also partially funded by the ERC-StG COSTPOST (#336475) to Mikko Myrskylä †Universidad Pontificia Comillas, Department of Business Management (email: [email protected]). ‡García-Hombrados: Corresponding author. Max Planck Institute for Demographic Research (MPIDR) and Universidad Autónoma de Madrid (email: [email protected]). §LIRNEasia (email: [email protected]). 1 1 Introduction This paper studies the effect of mobile phone coverage development on migration. It makes use of a novel instrumental variable approach suggested by Manacorda and Tesei (2019) and Andersen et al.(2011). We find that longer exposure to mobile phone network decreases migration. In a context where 11% of households include at least 1 migrant, an increase of 1 month in the time exposed to mobile phone decreases the probability of having a migrant in the household by 0.0024 percentage points. Furthermore, this paper explores the channels that might be driving this effect. It finds suggestive evidence that mobile phones enhances labor market opportunities, and in particular the probability of receiving a wage, by improving communication, social relationships and perceived well- being. Consequently, the opportunity cost of migration increases and both internal and international migration diminish. The potential socioeconomic effects of the expansion and improvement of mobile phone signal in Myanmar are manifold.1 Different studies show evidence that partic- ularly in developing countries with largely imperfect markets and high transport costs, the expansion of mobile phone coverage can improve different development outcomes (Aker, 2008; Jensen, 2007; Roller and Waverman, 1996; Andersen et al., 2012; Klonner and Nolen, 2010; Hall et al., 2014) and may facilitate institutional change (Shapiro and Wei- dmann, 2015; Aker et al., 2017; Andersen et al., 2011; Manacorda and Tesei, 2019). For example, Klonner and Nolen(2010) find that the roll out of mobile phone network in rural areas of South Africa increases the employment rate by 15 percentage points, with even larger effects for women; and Jensen(2007) and Aker(2008) show that the roll out of mobile phone signal leads to substantial welfare improvements for both producers and consumers in fishing areas of India and rural areas of Niger. Less clear is however the link between the expansion of mobile phone network and migration. In principle, access to mobile phone signal may decrease the costs of migra- tion through facilitating communication between the migrant and the family (migrating effect). However, the benefits of access to mobile phones in terms of labour market and access to information may also increase the opportunity cost of migration (non-migrating effect). Thus, the effect of expanding access to mobile phones on migration is theoretically ambiguous and remains an empirical question. To the best of our knowledge, this question has been empirically explored in two pre- vious studies, both of them suggesting that the roll out of mobile phone coverage could foster migration. Muto(2009) finds that mobile phones strengthen ethnic networks and enhances decisions to migrate to find a job. Aker et al.(2011) uses a randomised controlled trial design to evaluate the impact of an adult educational programme that teach students how to use simple mobile phones in Niger. They find that access to mobile phones in- 1Appendix SectionA briefly describes the economic and political background in Myanmar . 2 creases the likelihood of migration of at least one household member by 7 percentage points. In contrary, our paper shows that, in Myanmar, the roll-out of mobile phone net- work decreased migration suggesting that the causal link between mobile phones and migration might be context-dependent. The document is structured as follows. Section2 describes the recent process of ex- pansion of mobile phone coverage in Myanmar. Then, section3 introduces the empirical framework for the analysis and section4 describes the data used in the analysis. Section 5 presents the main results of the study and section6 concludes. 2 The Expansion of Mobile Phone Signal across Myanmar Until January 2014 there was only one mobile phone operator in Myanmar: the state- led company Myanmar Post and Telecommunications (hereafter, MPT). Although MPT has been providing mobile phone services since the 90’s in Myanmar, World Bank(2015) suggests that most rural and conflict areas across the country did not receive any mobile phone network and the signal provided was very poor in most areas until 2014. FIN- MARK(2013) estimates that only around 42% of the households in Myanmar were using mobile phones in 2013. With the intention of increasing the deployment of telecommunication infrastructure and improving the access, efficiency and effectiveness of telecommunications services de- livered in Myanmar to end users, the Government of Myanmar passed a new telecommu- nication law in October 2013. Such a law broke the MPT monopoly by allowing interna- tional and domestic private sector companies to participate in free and fair competition in the provision of telecommunication services including mobile phone services. The telecommunication law was followed by additional regulation developed by the Posts and Telecommunications Department of the Ministry of Communication in Myanmar. This regulation settles the details of licensing, spectrum, numbering, interconnection and access and competition in the telecommunication sector in Myanmar. Following the ap- proval of the law, the international mobile phone operators Telenor and Ooredoo ob- tained licenses to provide telecommunication services in Myanmar as integrated license operators in January 2014. The new mobile phone operators were enabled to develop telecommunication infrastructure and provide network service (2G, 3G and 4G). The new licensees committed to roll out mobile phone signal covering the 90% of Myanmar’s ter- ritory in a period of five years. The survey used in this paper was implemented in 420 villages and wards across Myanmar commissioned by LIRNEasia and conducted between February and March 2015. Information on the availability of mobile phone signal in a village or ward, and if so, on the date in which the signal was first established was collected at the village/ward 3 level from a community leader. In 324 out of the 420 villages/wards surveyed, the com- munity leader was interviewed and reported data on the timing and availability of mobile phone signal in his community. Remarkably, by the time the survey was implemented in February-March 2015 only 27 community leaders reported that their village or ward did not receive any mobile phone signal. The map in figure1 shows the timing of mobile phone installation in the villages and wards surveyed. Mainly led by MPT, the data reveal that although an important expansion of mobile phone network occurred in 2014 and early 2015, more than 50% of the communities surveyed were already receiving mobile phone signal before 2014 when the new regulation started operating. 3 Methodology This section introduces the empirical strategy for assessing the causal effects of length of exposure to mobile phone signal on migration. The main challenge in estimating the ef- fects in this case is addressing the endogeneity in the link between these two variables. An endogeneity problem would arise if, for example, mobile phone coverage development positively correlates with unobservables that affect migration. We address this concern using an instrumental variable (hereafter, IV) approach. Namely, we instrument mobile phone coverage development with flash activity. Fig- ure2 shows the incidence of lightnings across Myanmar using satellite geocoded infor- mation on lightning strikes. Figure3 shows the distribution of such a variable. As these two figures show, there is substantial variation in the values this variable takes and across villages of Myanmar. This considerable variation is used to instrument the expansion of mobile phone signal in Myanmar. Variation in lightning strikes has been previously used in the literature as an instru- mental variable to predict the expansion of mobile phone (Manacorda and Tesei, 2019; Andersen et al., 2011, 2012).