Skill Versus Spatial Emigration Effects on Origin Wages: Evidence from the Philippines (link)
Abstract: This paper estimates the labor supply effect of emigration on wages in the Philippines. Using survey microdata from 2001 to 2017, I construct measures of emigration rates of overseas Filipino workers by national education-experience cells and at the province level. To reconcile differences in the effects of emigration on wages found in the literature between approaches using emigration measured either at the level of skill group or geography, I develop testable hypotheses of differences in the wage impact from different sources of emigration using a simple theoretical model. I then test these using a shift-share instrumental variables approach, which leads to different estimates of wage elasticity with respect to emigration measured at either the geographic or skill cell level. A 1 percentage point positive shock to the emigration rate within a national skill group increases nonemigrant wages by 1.4\%, with gender-specific effects of 3.1% for men and 0.8% for women. In contrast, by including cross-skill wage effects within a geography, emigration at the province level has null effects on overall province wages with variable wage effects across skill groups within a province. By estimating both spatial and skill cell emigration effects in the same setting, these results provide evidence that the impact on nonemigrant wages from emigration of similarly skilled workers is larger than the impact from emigration of geographically similar workers, although there is some evidence that geographic emigration matters across skill groups of men and that gender wage inequality increases with higher relative geographic emigration of women.