Monday, 29 May 2017

Return migrants to Vietnam prefer areas with higher-quality institutions

One of the enduring theories of migration is the push-pull theory of Everett Lee (see here for the original research paper from 1966). In this theory, there are factors in the origin (where the migrants are coming from) that push them away, and factors in the destination (where the migrants go to) that pull them there. Many factors might be push or pull factors, including high (or low) wages, or good (or bad) amenities. As I discussed in a previous post, climate is one factor that appears to affect migration, but only in a very limited way.

In a new working paper, Ngoc Tran, Jacques Poot and I look at return migration to Vietnam (this is where Vietnamese migrants have first migrated overseas, then return home to Vietnam), and specifically whether the location that return migrants return to is influenced by the quality of political and economic institutions (in economics, the term 'institutions' is used to refer to social and legal norms and rules). This question is important because there are generally few factors that policy makers can use to influence people's migration decisions, but the quality of institutions is generally something that is within their control. So, if they want to attract return migrants (or potentially other migrants), then having high quality institutions is important.

We used a database of the return migration choices of 654 Vietnamese return migrants to the south of Vietnam in 2014, including the province that they eventually settled in. We found that, holding other variables constant, older return migrants and male migrants were less likely to settle in Ho Chi Minh City (and more likely to return to other regions). Once we introduce the 'provincial competitiveness index' (a measure of local institutional quality in Vietnam) into the model, we find that return migrants are more likely to return to a region with higher-quality institutions.

Digging a bit deeper into the results, we find that this preference for higher-quality institutions depends on the age of the return migrant, with younger return migrants displaying a greater preference for higher-quality institutions than older return migrants. Also, migrants who returned from a country that itself has higher-quality institutions revealed a greater preference for higher-quality institutions when they returned to Vietnam (though this result was not nearly as statistically significant). These results are interesting, especially the latter result, which suggests that there are spillover effects of developing country migrants adopting expectations of high-quality institutions back home, that are similar to those they experienced in the host (usually developed) country. The results also suggest that better institutional quality may attract return migrants, especially those who are younger (and have greater remaining productivity and reproductive potential). Perhaps there might be some lessons to be learned in this for declining regions in other countries?

Finally, this paper is also the first research paper from Ngoc's PhD thesis, so congratulations to her on that achievement, and I look forward to reporting on her future work in later posts.

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