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The Effect of Foreign Aid on Migration

Author

Listed:
  • Fuchs, Andreas
  • Groeger, Andre
  • Heidland, Tobias
  • Wellner, Lukas

Abstract

Policymakers advocate for foreign aid to reduce migration. This study is the first to examine this policy's global effectiveness with micro data. We combine data on World Bank project announcements and disbursements from 2008-2019 with survey data on migration preferences of one million individuals worldwide and bilateral migration flows. Employing event studies and instrumental variable regressions, we find that in the short term, aid improves expectations of the future and trust in institutions, reducing individual migration preferences and asylum seeker flows. In the longer term, aid increases incomes, leading to more regular migration, consistent with the 'mobility transition' theory.

Suggested Citation

  • Fuchs, Andreas & Groeger, Andre & Heidland, Tobias & Wellner, Lukas, 2024. "The Effect of Foreign Aid on Migration," CEPR Discussion Papers 19332, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19332
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    More about this item

    Keywords

    Foreign aid; Aid effectiveness; World bank; International migration; Asylum migration; Aspirations; Gallup world poll;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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