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Labour Market Responses To Immigration: Evidence From Internal Migration Driven By Weather Shocks

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  • Marieke Kleemans
  • Jeremy Magruder

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.

Suggested Citation

  • Marieke Kleemans & Jeremy Magruder, 2018. "Labour Market Responses To Immigration: Evidence From Internal Migration Driven By Weather Shocks," Economic Journal, Royal Economic Society, vol. 128(613), pages 2032-2065, August.
    • Handle: RePEc:wly:econjl:v:128:y:2018:i:613:p:2032-2065
    DOI: 10.1111/ecoj.12510
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