IDEAS home Printed from https://ideas.repec.org/a/spr/revint/v16y2021i3d10.1007_s11558-020-09400-2.html
   My bibliography  Save this article

Does foreign aid volatility increase international migration?

Author

Listed:
  • Jonas Gamso

    (Arizona State University)

  • Jikuo Lu

    (University of Pittsburgh)

  • Farhod Yuldashev

    (University of Pittsburgh)

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.

Suggested Citation

  • Jonas Gamso & Jikuo Lu & Farhod Yuldashev, 2021. "Does foreign aid volatility increase international migration?," The Review of International Organizations, Springer, vol. 16(3), pages 581-598, July.
    • Handle: RePEc:spr:revint:v:16:y:2021:i:3:d:10.1007_s11558-020-09400-2
    DOI: 10.1007/s11558-020-09400-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11558-020-09400-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11558-020-09400-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Berthélemy, Jean-Claude & Beuran, Monica & Maurel, Mathilde, 2009. "Aid and Migration: Substitutes or Complements?," World Development, Elsevier, vol. 37(10), pages 1589-1599, October.
    2. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521016957, September.
    3. Molly Bauer & Cesi Cruz & Benjamin Graham, 2012. "Democracies only: When do IMF agreements serve as a seal of approval?," The Review of International Organizations, Springer, vol. 7(1), pages 33-58, March.
    4. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2008. "Does US aid buy UN general assembly votes? A disaggregated analysis," Public Choice, Springer, vol. 136(1), pages 139-164, July.
    5. Cécile Couharde & Fatih Karanfil & Eric Gabin Kilamaa & Luc Désiré Omgbaa, 2017. "The Importance of Oil in the Allocation of Foreign Aid: The case of the G7 donors," EconomiX Working Papers 2017-40, University of Paris Nanterre, EconomiX.
    6. Robert K. Fleck & Christopher Kilby, 2006. "How Do Political Changes Influence US Bilateral Aid Allocations? Evidence from Panel Data," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 210-223, May.
    7. Michael A. Clemens & Hannah M. Postel, 2018. "Deterring Emigration with Foreign Aid: An Overview of Evidence from Low‐Income Countries," Population and Development Review, The Population Council, Inc., vol. 44(4), pages 667-693, December.
    8. Sanjay Jain, 2007. "Project Assistance versus Budget Support: An Incentive-Theoretic Analysis of Aid Conditionality," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 694-719, December.
    9. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
    10. Emmanuel Kumi & Muazu Ibrahim & Thomas Yeboah, 2017. "Aid, Aid Volatility and Sectoral Growth in Sub-Saharan Africa: Does Finance Matter?," Journal of African Business, Taylor & Francis Journals, vol. 18(4), pages 435-456, October.
    11. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 310-329, October.
    12. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    13. Marie Poprawe, 2015. "On the relationship between corruption and migration: empirical evidence from a gravity model of migration," Public Choice, Springer, vol. 163(3), pages 337-354, June.
    14. Bulír, Ales & Hamann, A. Javier, 2008. "Volatility of Development Aid: From the Frying Pan into the Fire?," World Development, Elsevier, vol. 36(10), pages 2048-2066, October.
    15. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
    16. Bermeo, Sarah Blodgett & Leblang, David, 2015. "Migration and Foreign Aid," International Organization, Cambridge University Press, vol. 69(3), pages 627-657, July.
    17. Lisa Chauvet & Patrick Guillaumont, 2009. "Aid, Volatility, and Growth Again: When Aid Volatility Matters and When it Does Not," Review of Development Economics, Wiley Blackwell, vol. 13(3), pages 452-463, August.
    18. Nihal Bayraktar, 2020. "Volatility of Education Aid and Female Education," Springer Proceedings in Business and Economics, in: Nicholas Tsounis & Aspasia Vlachvei (ed.), Advances in Cross-Section Data Methods in Applied Economic Research, chapter 2, pages 23-41, Springer.
    19. Thierry Kangoye, 2013. "Does aid unpredictability weaken governance? Evidence from developing countries," The Developing Economies, Institute of Developing Economies, vol. 51(2), pages 121-144, June.
    20. Pack, Howard & Pack, Janet Rothenberg, 1993. "Foreign Aid and the Question of Fungibility," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 258-265, May.
    21. Susanna Wolf, 2007. "Does Aid Improve Public Service Delivery?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 650-672, December.
    22. Michael A. Clemens, 2014. "Does development reduce migration?," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 6, pages 152-185, Edward Elgar Publishing.
    23. Dang, Hai-Anh & Knack, Stephen & Rogers, F. Halsey, 2013. "International aid and financial crises in donor countries," European Journal of Political Economy, Elsevier, vol. 32(C), pages 232-250.
    24. Nancy Qian, 2015. "Making Progress on Foreign Aid," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 277-308, August.
    25. Hudson, John & Mosley, Paul, 2008. "Aid Volatility, Policy and Development," World Development, Elsevier, vol. 36(10), pages 2082-2102, October.
    26. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 681-730, September.
    27. Cashel-Cordo, Peter & Craig, Steven G., 1990. "The public sector impact of international resource transfers," Journal of Development Economics, Elsevier, vol. 32(1), pages 17-42, January.
    28. de Ree, Joppe & Nillesen, Eleonora, 2009. "Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 88(2), pages 301-313, March.
    29. Paul Mosley & Abrar Suleiman, 2007. "Aid, Agriculture and Poverty in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 139-158, February.
    30. Brautigam, Deborah A & Knack, Stephen, 2004. "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 255-285, January.
    31. Breunig, Christian & Cao, Xun & Luedtke, Adam, 2012. "Global Migration and Political Regime Type: A Democratic Disadvantage," British Journal of Political Science, Cambridge University Press, vol. 42(4), pages 825-854, October.
    32. Anke Schwittay, 2019. "Digital mediations of everyday humanitarianism: the case of Kiva.org," Third World Quarterly, Taylor & Francis Journals, vol. 40(10), pages 1921-1938, October.
    33. Arjan de Haan, 1999. "Livelihoods and poverty: The role of migration - a critical review of the migration literature," Journal of Development Studies, Taylor & Francis Journals, vol. 36(2), pages 1-47.
    34. Mathias Czaika & Krisztina Kis-Katos, 2009. "Civil Conflict and Displacement: Village-Level Determinants of Forced Migration in Aceh," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(3), pages 399-418, May.
    35. Hudson, John, 2015. "Consequences of Aid Volatility for Macroeconomic Management and Aid Effectiveness," World Development, Elsevier, vol. 69(C), pages 62-74.
    36. Ralph Rotte & Michael Vogler, 2000. "The effects of development on migration: Theoretical issues and new empirical evidence," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(3), pages 485-508.
    37. Thierry Kangoye, 2013. "Does aid unpredictability weaken governance? Evidence from developing countries," Post-Print halshs-00843756, HAL.
    38. Akiko Suwa-Eisenmann & Thierry Verdier, 2007. "Aid and trade," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(3), pages 481-507, Autumn.
    39. Couharde, Cécile & Karanfil, Fatih & Kilama, Eric Gabin & Omgba, Luc Désiré, 2020. "The role of oil in the allocation of foreign aid: The case of the G7 donors," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 363-383.
    40. Gamso, Jonas & Yuldashev, Farhod, 2018. "Does rural development aid reduce international migration?," World Development, Elsevier, vol. 110(C), pages 268-282.
    41. repec:dau:papers:123456789/5400 is not listed on IDEAS
    42. Karen L. Remmer, 2004. "Does Foreign Aid Promote the Expansion of Government?," American Journal of Political Science, John Wiley & Sons, vol. 48(1), pages 77-92, January.
    43. Kersting, Erasmus & Kilby, Christopher, 2014. "Aid and democracy redux," European Economic Review, Elsevier, vol. 67(C), pages 125-143.
    44. Agénor, Pierre-Richard & Aizenman, Joshua, 2010. "Aid volatility and poverty traps," Journal of Development Economics, Elsevier, vol. 91(1), pages 1-7, January.
    45. Ly, Pierre & Mason, Geri, 2012. "Competition Between Microfinance NGOs: Evidence from Kiva," World Development, Elsevier, vol. 40(3), pages 643-655.
    46. Thierry Kangoye, 2013. "Does aid unpredictability weaken governance? Evidence from developing countries," Post-Print halshs-00843755, HAL.
    47. Selaya, Pablo & Sunesen, Eva Rytter, 2012. "Does Foreign Aid Increase Foreign Direct Investment?," World Development, Elsevier, vol. 40(11), pages 2155-2176.
    48. Richard A. Nielsen & Michael G. Findley & Zachary S. Davis & Tara Candland & Daniel L. Nielson, 2011. "Foreign Aid Shocks as a Cause of Violent Armed Conflict," American Journal of Political Science, John Wiley & Sons, vol. 55(2), pages 219-232, April.
    49. George Psacharopoulos & Harry Anthony Patrinos, 2018. "Returns to investment in education: a decennial review of the global literature," Education Economics, Taylor & Francis Journals, vol. 26(5), pages 445-458, September.
    50. Gordon H. Hanson & Craig McIntosh, 2012. "Birth Rates and Border Crossings: Latin American Migration to the US, Canada, Spain and the UK," Economic Journal, Royal Economic Society, vol. 122(561), pages 707-726, June.
    51. Alberto Zezza & Gero Carletto & Benjamin Davis, 2005. "Moving Away from Poverty: A spatial analysis of poverty and migration in Albania," Working Papers 05-02, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    52. Susanna Wolf, 2007. "Does Aid Improve Public Service Delivery?," WIDER Working Paper Series RP2007-71, World Institute for Development Economic Research (UNU-WIDER).
    53. Sebastian Galiani & Stephen Knack & Lixin Colin Xu & Ben Zou, 2017. "The effect of aid on growth: evidence from a Quasi-experiment," Journal of Economic Growth, Springer, vol. 22(1), pages 1-33, March.
    54. Tertytchnaya, Katerina & De Vries, Catherine E. & Solaz, Hector & Doyle, David, 2018. "When the Money Stops: Fluctuations in Financial Remittances and Incumbent Approval in Central Eastern Europe, the Caucasus and Central Asia," American Political Science Review, Cambridge University Press, vol. 112(4), pages 758-774, November.
    55. Fred Halliday, 1977. "Migration and the Labour Force in the Oil Producing States of the Middle East," Development and Change, International Institute of Social Studies, vol. 8(3), pages 263-291, July.
    56. Jac C. Heckelman & Stephen Knack, 2009. "Aid, Economic Freedom, And Growth," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 46-53, January.
    57. Bill Gibson, 2008. "Data Problems and Empirical Modeling in Developing Economies," Chapters, in: Amitava Krishna Dutt & Jaime Ros (ed.), International Handbook of Development Economics, Volumes 1 & 2, volume 0, chapter 6, Edward Elgar Publishing.
    58. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," The World Bank Economic Review, World Bank, vol. 12(1), pages 29-58, January.
    59. Rodrik, Dani, 1990. "How should structural adjustment programs be designed?," World Development, Elsevier, vol. 18(7), pages 933-947, July.
    60. Lanati, Mauro & Thiele, Rainer, 2018. "The impact of foreign aid on migration revisited," World Development, Elsevier, vol. 111(C), pages 59-74.
    61. Mauro Lanati & Rainer Thiele, 2020. "Foreign assistance and emigration: Accounting for the role of non‐transferred aid," The World Economy, Wiley Blackwell, vol. 43(7), pages 1951-1976, July.
    62. Neanidis, Kyriakos C. & Varvarigos, Dimitrios, 2009. "The allocation of volatile aid and economic growth: Theory and evidence," European Journal of Political Economy, Elsevier, vol. 25(4), pages 447-462, December.
    63. Robert E.B. Lucas (ed.), 2014. "International Handbook on Migration and Economic Development," Books, Edward Elgar Publishing, number 15465.
    64. Christina Davenport & Will Moore & Steven Poe, 2003. "Sometimes You Just Have to Leave: Domestic Threats and Forced Migration, 1964-1989," International Interactions, Taylor & Francis Journals, vol. 29(1), pages 27-55, January.
    65. Savun, Burcu & Tirone, Daniel C., 2012. "Exogenous Shocks, Foreign Aid, and Civil War," International Organization, Cambridge University Press, vol. 66(3), pages 363-393, July.
    66. Nicholas Tsounis & Aspasia Vlachvei (ed.), 2020. "Advances in Cross-Section Data Methods in Applied Economic Research," Springer Proceedings in Business and Economics, Springer, number 978-3-030-38253-7, March.
    67. repec:bla:rdevec:v:13:y:2009:i:s1:p:452-463 is not listed on IDEAS
    68. Oya Celasun & Jan Walliser, 2008. "Predictability of aid: Do fickle donors undermine aid effectiveness? [‘The colonial origins of comparative development: An empirical investigation’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(55), pages 546-594.
    69. Lanati, Mauro & Thiele, Rainer, 2018. "Foreign assistance and migration choices: Disentangling the channels," Economics Letters, Elsevier, vol. 172(C), pages 148-151.
    70. Massey, Douglas S., 2005. "Worlds in Motion: Understanding International Migration at the End of the Millennium," OUP Catalogue, Oxford University Press, number 9780199282760.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joop Age Harm Adema & Cevat Giray Aksoy & Panu Poutvaara, 2021. "Mobile Internet Access and the Desire to Emigrate," ifo Working Paper Series 365, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Philip Keefer & Christopher Kilby, 2021. "Introduction to the special issue: In memoriam Stephen Knack," The Review of International Organizations, Springer, vol. 16(3), pages 473-493, July.
    3. Roşca Vlad I. & Roman Monica & Cimpoeru Smaranda & Manafi Ioana & Prada Elena-Maria & Mureşan Laura, 2023. "The VUCA World of Arab and Moldovan Migrants in Romania," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 276-284, July.
    4. Jonas Gamso, 2024. "Food Aid Shocks and Food Insecurity: Does Democracy Matter?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1253-1279, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonas Gamso, 2024. "Food Aid Shocks and Food Insecurity: Does Democracy Matter?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1253-1279, October.
    2. Boateng, Elliot & Agbola, Frank W. & Mahmood, Amir, 2021. "Foreign aid volatility and economic growth in Sub-Saharan Africa: Does institutional quality matter?," Economic Modelling, Elsevier, vol. 96(C), pages 111-127.
    3. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    4. Hudson, John, 2015. "Consequences of Aid Volatility for Macroeconomic Management and Aid Effectiveness," World Development, Elsevier, vol. 69(C), pages 62-74.
    5. Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2024. "Aid effectiveness and donor motives," World Development, Elsevier, vol. 176(C).
    6. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    7. Hudson, John, 2015. "Consequences of Aid Volatility for Macroeconomic Management and Aid Effectiveness," World Development, Elsevier, vol. 69(C), pages 62-74.
    8. Gamso, Jonas & Yuldashev, Farhod, 2018. "Does rural development aid reduce international migration?," World Development, Elsevier, vol. 110(C), pages 268-282.
    9. Nadeem Abdulmalik Abdulrahman Aljonaid & Fengming Qin & Zhaoyong Zhang, 2022. "The Heterogeneous Impact of Sectoral Foreign Aid Inflows on Sectoral Growth: SUR Evidence from Selected Sub-Saharan African and MENA Countries," JRFM, MDPI, vol. 15(3), pages 1-45, February.
    10. Paul Clist & Gabriele Restelli, 2021. "Development aid and international migration to Italy: Does aid reduce irregular flows?," The World Economy, Wiley Blackwell, vol. 44(5), pages 1281-1311, May.
    11. Gnangnon, Sèna Kimm, 2021. "Aid for trade unpredictability and trade-related government expenditure in recipient-countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 107-125.
    12. repec:unu:wpaper:wp2012-35 is not listed on IDEAS
    13. Gabriele Restelli, 2021. "The effects of development aid on irregular migration to Europe: Deterrence or attraction?," Development Policy Review, Overseas Development Institute, vol. 39(6), pages 926-952, November.
    14. Lanati, Mauro & Thiele, Rainer, 2020. "International Student Flows from Developing Countries: Do Donors Have an Impact?," Economics of Education Review, Elsevier, vol. 77(C).
    15. Mauro Lanati & Rainer Thiele, 2021. "Aid for health, economic growth, and the emigration of medical workers," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(7), pages 1112-1140, October.
    16. Mauro Lanati & Rainer Thiele, 2020. "Foreign assistance and emigration: Accounting for the role of non‐transferred aid," The World Economy, Wiley Blackwell, vol. 43(7), pages 1951-1976, July.
    17. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    18. Lanati, Mauro & Thiele, Rainer, 2018. "The impact of foreign aid on migration revisited," World Development, Elsevier, vol. 111(C), pages 59-74.
    19. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    20. Gnangnon, Sèna Kimm, 2023. "The Quality of Aid for Trade Flows and Economic Complexity," EconStor Preprints 271538, ZBW - Leibniz Information Centre for Economics.
    21. Alessandro De Matteis, 2018. "Follow the leader! The peer effect in aid supply decisions," Development Policy Review, Overseas Development Institute, vol. 36(6), pages 631-648, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:revint:v:16:y:2021:i:3:d:10.1007_s11558-020-09400-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.