Internal Migration and Labor Market Outcomes in Indonesia

Tushar Bharati and Wina Yoman
Additional contact information
Wina Yoman: Bain & Company

No 21-05, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: We study the labor market effects of domestic migration in Indonesia on the employment outcomes of the natives and the migrants. To address the endogeneity of migrants’ settlement decisions, we use the information on the historical migration patterns from the Indonesian censuses to construct an internal migration version of the Bartik shift-share instrument. The instrument, used widely in the study of international migration, is based on the observation that even within countries, migrants tend to move to regions with a large migrant population from their region of origin. However, if the migration patterns are unchanged over time, past migration may affect current labor market outcomes directly, violating the exclusion restriction. To overcome this, we use a multi-instrument approach that lets us account for the long-term effects of migration separately. We find that internal migration is associated with an increase in migrant employment and a decrease in native employment. Less-educated natives in loweducation regencies are most-affected. The findings suggest that policies aiming to minimize the adverse effects of internal migration should aim at improving the human capital of natives.

Keywords: shift-share instrument; internal migration; employment; natives (search for similar items in EconPapers)
JEL-codes: C36 E24 J61 O15 R23 (search for similar items in EconPapers)
Pages: 45
Date: 2021
New Economics Papers: this item is included in nep-lab, nep-mac, nep-mig, nep-sea and nep-ure
Note: MD5 = fc93cb922c5ba47c9397e42b3c45d86f
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Journal Article: Internal Migration and Labor Market Outcomes in Indonesia (2024)
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