Work

Effects of emigration on labor markets in migrant origin areas: Evidence from internal migration in Indonesia

Year: 2025

Type: article

Abstract: We study the effects of internal migration in Indonesia on labor market outcomes of non-migrants in origin areas. To address endogeneity of the decision to migrate, we instrument emigration rates with shift-share labor demand shocks in destination areas interacted with historical migration patterns. Using detailed longitudinal data from over 36,000 individuals, whom we observe over a 27-year period, we find that a one percentage point increase in the emigration rate leads to a 3.42% increase in hourly income for those who stay in origin areas. Given the high degree of informality in Indonesia, we then look separately at effects for formal- and informal-sector workers. In line with a dual-sector labor market model, we find that employment effects are concentrated in the formal sector and income effects are most pronounced in the informal sector. Even though emigrants tend to be higher-educated, lower-educated non-migrants benefit the most as they switch to formal sector work and benefit from higher earnings in the informal sector.

Source: Journal of Development Economics

DOI: 10.1016/j.jdeveco.2025.103623

Authors: David H. Buller, Marieke Kleemans

Institution: University of Illinois Urbana-Champaign

Language: English

Topic: Migration and Labor Dynamics

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, Reduced inequalities, No poverty

Open Access status: hybrid

Estimated APC paid: $4,590