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The Benefits and Costs of Guest Worker Programs: Experimental Evidence from the India-UAE Migration Corridor

Author

Listed:
  • Suresh Naidu
  • Yaw Nyarko
  • Shing-Yi Wang

Abstract

We estimate the individual returns to temporary migration programs using a randomized experiment with several thousand job seekers in India applying to guest worker jobs in the United Arab Emirates (UAE). Working with construction companies and the UAE Ministry of Labor, we randomized job offers to potential migrant workers at recruitment sites. We measured effects on labor market outcomes, well-being, social relationships, and work satisfaction, as well as on labor intermediation costs, assets and debt. We find that workers who received the randomized offer experienced 30% higher earnings, and those who take up the offer to migrate to the UAE doubled their compensation. However, they also paid substantial upfront costs to labor intermediaries, financed by additional debt, that reduced take-home pay by about 10%. Migrants also reported a significant fall in subjective well-being, driven by increases in physical pain, effort, and heat. There were no significant effects on loneliness or other dimensions of well-being. Our finding of negative effects on well-being is consistent with the large share of workers offered jobs who did not migrate to the UAE. Extrapolating using a linear marginal treatment effects framework to workers who decline the UAE job offer, we find large and positive pecuniary returns to migration, even including intermediary fees, but even larger non-pecuniary costs.

Suggested Citation

  • Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2023. "The Benefits and Costs of Guest Worker Programs: Experimental Evidence from the India-UAE Migration Corridor," NBER Working Papers 31354, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31354
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    Cited by:

    1. Javier D. Donna & Pedro Pereira, 2024. "Structural Presumptions for Non-horizontal Mergers in the 2023 Merger Guidelines: A Primer and a Path Forward," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(1), pages 303-345, August.
    2. Unjournal Admin (NA) & Anonymous, 2024. "Evaluation 1 of "The Benefits and Costs of Guest Worker Programs: Experimental Evidence from the India-UAE Migration Corridor" for The Unjournal," The Unjournal Evaluations 2024-21, The Unjournal.

    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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