The Review of Economics and Statistics Vol. 99 No. 3 2017

Split Decisions: Household Finance When a Policy Discontinuity Allocates Overseas Work

Michael A. Clemens¹; Erwin R. Tiongson²

¹ Center for Global Development and IZA · ² Georgetown University, IZA, and Asian Institute of Management

Abstract

Temporary overseas work can both raise a family's income and split the household geographically, with theoretically ambiguous net effects on spending, finance, and labor supply decisions. We study a policy discontinuity in the Philippines that quasi-randomly assigned temporary, partial-household migration for high-wage jobs inKorea. This allows quasiexperimental estimates of reduced-form effects of migration. We find that migration causes large changes in households' spending and saving—not only through remittances but also migration-induced shifts in household decision-making power. Migration does not reduce labor supply by nonmigrants. Common nonexperimental estimators would have been subject to substantial selection bias in this setting.

DOI

10.1162/rest_a_00657

Volume

99

Issue

3

Pages

531-543

Language

en

Sources

openalex crossref