The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia

By G. Bryan, Melanie Morten. Journal of Political Economy, 2017

365 citations recorded by the source corpus.

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 move only 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 percent increase in labor productivity from removing all barriers. Reducing migration costs to the US level, a high-mobility benchmark, leads to a 7.1 percent productivity boost. These figures hide substantial heterogeneity. The origin population that benefits most sees a 104 percent increase in average earnings from a complete barrier removal, or a 25 percent gain from moving to the US benchmark.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/db7dc43047c6febf403def747402fc9a637925cb

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Citations in the corpus

The Welfare Effects of Encouraging Rural-Urban Migration (2018, background): “…of factors of production across firms, sectors or regions within an economy may underlie these TFP differences.1 One potentially large source of misallocation is an inefficient distribution of workers across space (see e.g. Bryan and Morten, 2019; McMillan and Rodrik, 2011; Vollrath, 2009).”
Rural-Urban Migration in Developing Countries: Lessons from the Literature (2021, background): “16 flow analysis reflects various costs associated with migration as well as the differences in migrants’ relative selectivity over distance (Bryan and Morten, 2019).”
Harvesting Prosperity: Technology and Productivity Growth in Agriculture (2019, background): “Misallocation and Productivity Growth 59 flows (on available opportunities); job search costs; amenity differences; familiarity (such as uncertainty associated with an unknown place); credit or financial constraints; or lack of insurance to compensate for informal networks to cope with livelihood ri”