The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia

Gharad Bryan and Melanie Morten

No 23540, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the aggregate productivity gains from reducing barriers to internal labor migration in Indonesia, accounting for worker selection and spatial differences in human capital. We distinguish between movement costs, which mean workers will only move if they expect higher wages, and amenity differences, which mean some locations must pay more to attract workers. We find modest but important aggregate impacts. We estimate a 22% increase in labor productivity from removing all barriers. Reducing migration costs to the US level, a high mobility benchmark, leads to an 8% productivity boost. These figures hides substantial heterogeneity. The origin population that benefits most sees an 104% increase in average earnings from a complete barrier removal, or a 37% increase from moving to the US benchmark.

JEL-codes: J61 O18 O53 R12 R23 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-eff, nep-lab, nep-mig, nep-sea, nep-tid and nep-ure
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Citations: View citations in EconPapers (14)

Published as Gharad Bryan & Melanie Morten, 2019. "The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia," Journal of Political Economy, vol 127(5), pages 2229-2268.

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