The Effect of Foreign Aid on Migration: Global Evidence from World Bank Projects
Andreas Fuchs, Andre Gröger, Tobias Heidland, and Lukas Wellner
Working paper
Abstract
In response to surging immigration pressure in Europe and the United States, Western policymakers advocate foreign aid as a means to fight the 'root causes' of irregular migration. This article provides the first global evidence of the effects of aid on migration preferences, migration flows, potential underlying mechanisms, both in the short and longer term. We combine newly geocoded data on World Bank aid project allocation at the subnational level over the period 2008--2019 with exceptionally rich survey data from a sample of almost one million individuals across the entire developing world and data on migration and asylum seeker flows to high-income countries. Employing two distinct causal estimation strategies, we show that in the short term (after the announcement of a World Bank project and within two years after project disbursement), foreign aid improves individual expectations about the future and trust in national institutions in aid-receiving regions, which translate into reduced individual migration preferences and asylum-seeker flows. In the longer term (between three and five years after disbursement), foreign aid fosters improvements in individual welfare through poverty reduction and income increases, resulting in larger regular migration to high-income countries. Our findings show that aid can cause a short-lived reduction in migration aspirations, except in fragile Sub-Saharan African contexts where aid appears ineffective. In contrast, foreign aid enhances individual capabilities over the longer term, contributing to greater regular migration, consistent with the 'mobility transition' theory.
Working paper (October 2023)
Video
Presentations at conferences and workshops
In the media (newspapers, blogs)
Press release
See also
Andreas Fuchs, Andre Gröger, Tobias Heidland, and Lukas Wellner
Working paper
Abstract
In response to surging immigration pressure in Europe and the United States, Western policymakers advocate foreign aid as a means to fight the 'root causes' of irregular migration. This article provides the first global evidence of the effects of aid on migration preferences, migration flows, potential underlying mechanisms, both in the short and longer term. We combine newly geocoded data on World Bank aid project allocation at the subnational level over the period 2008--2019 with exceptionally rich survey data from a sample of almost one million individuals across the entire developing world and data on migration and asylum seeker flows to high-income countries. Employing two distinct causal estimation strategies, we show that in the short term (after the announcement of a World Bank project and within two years after project disbursement), foreign aid improves individual expectations about the future and trust in national institutions in aid-receiving regions, which translate into reduced individual migration preferences and asylum-seeker flows. In the longer term (between three and five years after disbursement), foreign aid fosters improvements in individual welfare through poverty reduction and income increases, resulting in larger regular migration to high-income countries. Our findings show that aid can cause a short-lived reduction in migration aspirations, except in fragile Sub-Saharan African contexts where aid appears ineffective. In contrast, foreign aid enhances individual capabilities over the longer term, contributing to greater regular migration, consistent with the 'mobility transition' theory.
Working paper (October 2023)
Video
Presentations at conferences and workshops
- Research Seminar at the Department of Economics, University of Bergen, Norway (06/2018)
- CEPR-TCD-TIME Conference on Economic Development at Trinity College Dublin, Ireland (October 2023)
- Conference on the Political Economy of Aid at University College Dublin, Ireland (October 2023)
- National University of Singapore (October 2023)
- First Homecoming of the Göttingen School of Development Economics in Göttingen, Germany (September 2023)
- Oxford Development Economics Workshop in Oxford, UK (September 2023)
- 36th Annual Conference of the European Society for Population Economics in Belgrade, Serbia (June 2023)
- Beyond Basic Questions Workshop at the University of Stuttgart, Germany (June 2023)
- German Development Economics Conference at the Technical University Dresden, Germany (June 2023)
- Conference of the Society of Labor Economists in Philadelphia, USA (May 2023)
- 15th Annual Conference on the Political Economy of International Organization in San Diego, USA (May 2023)
- Workshop on the Economics and Politics of Migration at Kadir Has University in Istanbul, Turkey (March 2023)
- Annual Meeting of the European Public Choice Society at the University of Hanover, Germany (March 2023)
- GSIPE Conference at Brandeis University in Waltham, USA (February 2023)
- International Political Economy Society Conference at the University of Pittsburgh, USA (October 2022)
- 15th International Conference on Migration and Development at the Universidade NOVA de Lisboa, Portugal (September 2022)
- 3rd CReAM/RWI Workshop on the Economics of Migration in Essen, Germany (September 2022)
- VfS Annual Conference 2022 in Basel, Switzerland (September 2022)
- PEGNet Conference in Kampala, Uganda (September 2022)
- Participants of research seminars at the following institutions: Universitat Autonoma de Barcelona, the University of Chile, Goethe University Frankfurt, the University of Göttingen, Heidelberg University, the Kiel Institute for the World Economy, the Luxembourg Institute of Socio-Economic Research, Princeton University, National University of Singapore, Talca University, and Villanova University
In the media (newspapers, blogs)
- devex
- Kieler Nachrichten (in German)
- WDR (in German)
- Welt (in German)
Press release
See also
