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How Foreign Aid Affects Migration: Quantifying Transmission Channels

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Abstract

This is the first global study that quantifies the transmission channels through which foreign aid impacts migration to donor countries. We estimate a gravity model derived from a RUM model, using OECD data between 2011 and 2019 an instrumentation strategy. Our identification takes advantage of data on multilateral aid provided by multilateral agencies which is non-donor specific. We find evidence that aid donated by a country increases migration to that country through an information channel. If that channel were the only one at play, a 1% increase in bilateral aid would induce a 0.17% increase in migration. In addition, a 1% increase in multilateral aid reduces migration from the less poor origin countries by 0.05% via a development channel

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  • Léa Marchal & Claire Naiditch & Betül Simsek, 2022. "How Foreign Aid Affects Migration: Quantifying Transmission Channels," Documents de travail du Centre d'Economie de la Sorbonne 22022, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:22022
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    More about this item

    Keywords

    Aid; Gravity; Migration;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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