Lessons from the application of the Instrumental Variable (IV) research design to sudden immigration shocks

Maria Romero (mromero@udesa.edu.ar)
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Maria Romero: Universidad de San Andres, Centro de Estudios para el Desarrollo Humano (CEDH)

Economics Bulletin, 2024, vol. 44, issue 4, 1528 - 1544

Abstract: The Instrumental Variable (IV) approach is commonly used to solve the endogeneity of migrants' decisions on where to locate. Using the Venezuelan migration shock to Peru between 2016 and 2018 as an example, I compare the first-stage estimates of different shift-share instruments commonly used in the IV approach. I show that in this example a sudden migration shock cannot be predicted by past migration simply because past migration is little or insignificant. In a globalized world, when there is no historical previous influx of migrants to the destination location and mass migration, I encourage contributors to the migration literature to report detailed statistical analyses of the first stage using the instrumental variable approach or pursue other identification strategies.

Keywords: Instrumental Variable; shift-share; immigration. (search for similar items in EconPapers)
JEL-codes: C2 J6 (search for similar items in EconPapers)
Date: 2024-12-30
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