1. Does migration to Thailand reduce Thai wages? John Bryant and Pungpond Rukumnuaykit Institute for Population and Social Research Mahidol University, Thailand Presentation to Migration and Development BBL, 6 December 2007

2. Labor market impact of migration to developing countries Some developing countries receive significant immigration –eg South Africa, Argentina, Tajikistan, Thailand Most econometric studies in developed countries suggest effect of immigration is small But hazardous to extrapolate to developing countries

3. Thailand is a good place to study labor market effects of immigration Significant immigration –Roughly 2 million immigrants, mostly from Myanmar, though some from Cambodia, Laos, other –Almost all entered illegally –Almost all do unskilled work Relatively good data on immigrants –2004 amnesty/registration probably captured about half of all migrants –Ministry of Labor provided access to data Extensive, relatively good data on Thais

4. Results from poll of 4,184 Thais, 2006 ResponsePercent Yes83% No5% No response12% Total100% If the government allowed more migrants to enter Thailand, would this harm the wages of Thai workers?

5. Analytical strategy for this study Use geographical variation –Test whether, all else equal, Thais in districts with more migrants have lower wages –Most common strategy in developed-country studies Allow for endogenous migration –Migrants move to places with high wages –Include control variables –Instrument migrant intensity (Also allow for endogenous under-counting of migration)

6. Dependent variable: Wages of Thais District average for (log of) hourly wages Only private employees (41% of labor force) Use regression to remove the effect of differences in human capital

7. Main explanatory variable: Migrant intensity Burmese migrants as a proportion of the district population (expressed in log terms)

8. Raw relationship between wages of Thais and migrant intensity Positive slope because migrants go to places with high wages

9. Allowing for endogeneity (i): Add control variables Statistical model of effect of migrant intensity on Thai wages Coefficient on migrant intensity No controls+0.090 With controls*+0.026 *Control variables: Distance from Bangkok Border district Gross Provincial Product per capita Percent of households that are poor Employment structure

10. Allowing for endogeneity (ii): Instrument on distance to border Very strong relationship between migrant intensity and distance to border, even with controls for demand for labor Reason –Transport costs –‘Friends and neighbors’ effects Source of exogenous variation in migrant intensity Migrant intensity vs distance to Burmese border

11. Allowing for endogeneity (ii): Instrument on distance to border Statistical model of effect of migrant intensity on Thai wages Coefficient on migrant intensity No controls+0.113 With controls+0.026 With controls, and instrumenting on distance to border -0.023

12. Extensions and robustness tests - Wages IssueFinding Effect stronger for low- skilled Thais? Inconclusive Effect stronger for Thai males? Weak confirmation Spatial dependencyNot important Effect on wages of government employees None

13. Extensions - Employment IssueFinding Does immigration reduce the hours worked by Thai private employees? No Does immigration reduce the proportion of Thais who are employed? No Does migration reduce the proportion of Thais working as private employees? No

14. Limitations Compensatory migration by Thais may be masking labor market impact of immigration –But cannot test because data on internal migration by Thais are unreliable Even with controls, distance to the Burmese border may be correlated with demand for labor or under-reporting Coefficient on migrant intensity in main wage model only just significant (p=0.041)

15. Conclusions Wages: A 10% increase in migrants reduces Thai wages by roughly 0.2% Employment: No effect on Thai employment

16. Comparison with previous estimates Most previous studies report coefficients from a regression of log wages against migrant share We regress log wages against log migrant share To compare, we need to divide our estimate by the district average for migrant share: -0.023 ÷ 0.013 = -1.77 According to a meta-analysis, the median value for developed countries is -0.12

17. Coverage of migrants in the 2000 Thai Census Burmese –Number of people of Burmese nationality, born outside Thailand, aged 15+, according to 2000 Census: 63,229 –Number of Burmese who registered to work in Thailand in 2001: 451,335 Japanese –Number of people of Japanese nationality, born outside Thailand, aged 15+, and employed, according to 2000 Census: 2,582 –Number of work permits issued to Japanese nationals, 2000: 13,355