Dany Bahar, David M. Rubenstein Fellow, Global Economy and Development Program, Brookings Institution
Anna Maria Mayda, Associate Professor of Economics, Georgetown University
Michael Clemens, Co-Director of Migration, Displacement, and Humanitarian Policy and Senior Fellow, Center for Global Development
During the early 1990s Germany received over half a million Yugoslavians fleeing war. By 2000, many of these refugees were repatriated. In their new paper, Dany Bahar and his co-authors exploit this episode to provide causal evidence on the role migrants play in contributing to productivity shifts in their home countries after their return, as explained by changes in comparative advantage.
They find that the elasticity of exports to return migration is between 0.1 to 0.24 in industries where migrants were employed during their stay in Germany. In order to deal with endogeneity issues they use historic exogenous rules of allocation of asylum seekers across different German states to construct an instrumental variable for the treatment. They also find their results to be externally valid when expanding the sample to all countries, and, furthermore, that they are mostly driven by workers in occupations intensive in characteristics more prevalent among managerial positions. These results point to knowledge diffusion as the main channel driving the link between migration and productivity shifts.