Integrity for Hire: An Analysis of a Widespread Program for Combating Customs Corruption

Can governments successfully combat bureaucratic corruption by “hiring integrity” from the private sector? This paper examines the impact of hiring private firms to collect information for government anti-corruption efforts. In the past two decades, a number of developing countries have hired private firms to conduct preshipment inspections of imports, generating data that governments can use to fight corruption in customs agencies. I find that countries implementing such inspection programs subsequently experience large increases in the growth rate of import duties, by 6 to 8 percentage points annually. By contrast, the growth rate of other tax revenues does not change appreciably. Additional evidence suggests that declines in customs corruption are behind the import duty improvements: the programs also lead to increases in imports (potentially reflecting lower bribe payments) and to declines in mis-reporting of goods classifications. Historically, this hired integrity appears to have been cost-effective: accumulated improvements in import duty collections in the fifth year of a typical inspection program were roughly 5 times accumulated costs.corruption, crime, bribery, enforcement, tax evasion, customs

International Migration and Human Development

This paper reviews the relationship between international migration and human development. First, it reviews what we know about the factors that drive migration from developing to developed countries. Second, it reviews existing knowledge about the impact of international migration and remittances on the economic and human development of migrants’ source countries. These first two sections of the paper are accompanied by an assessment of the gaps in our knowledge that need to be filled with further research. The last section of the paper outlines policies that could help raise the development impact of migration and remittances. First, governments should extend absentee voting rights to overseas citizens. In addition, facilitating migrants’ access to and use of financial services could bring substantial benefits. Furthermore, governments can profitably devote self-discovery and enterprise promotion efforts to small-scale activities. Finally, there could be substantial benefits from encouraging overseas citizens to retire at home while taking advantage of accumulated retirement benefits from their migration host countries.International migration, remittances, human development

Why Do Migrants Return to Poor Countries? Evidence From Philippine Migrants%u2019 Responses to Exchange Rate Shocks

This paper distinguishes between target-earnings and life-cycle motivations for return migration by examining how Philippine migrants%u2019 return decisions respond to major, unexpected exchange rate changes in their overseas locations (due to the Asian financial crisis). Overall, the evidence favors the life-cycle explanation: more favorable exchange rate shocks lead to fewer migrant returns. A 10% improvement in the exchange rate reduces the 12-month return rate by 1.4 percentage points. However, some migrants appear motivated by target-earnings considerations: in households with intermediate foreign earnings, favorable exchange rate shocks have the least effect on return migration, but lead to increases in household investment.

International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks

Millions of households in developing countries receive financial support from family members working overseas. How do migrant earnings affect origin-household investments? This paper examines Philippine households%u2019 responses to overseas members%u2019 economic shocks. Overseas Filipinos work in dozens of foreign countries, which experienced sudden (and heterogeneous) changes in exchange rates due to the 1997 Asian financial crisis. Appreciation of a migrant%u2019s currency against the Philippine peso leads to increases in household remittances received from overseas. The estimated elasticity of Philippine-peso remittances with respect to the Philippine/foreign exchange rate is 0.60. These positive income shocks lead to enhanced human capital accumulation and entrepreneurship in migrants%u2019 origin households. Child schooling and educational expenditure rise, while child labor falls. In the area of entrepreneurship, households raise hours worked in self-employment, and become more likely to start relatively capital-intensive household enterprises.

International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks

Millions of households in developing countries receive financial support from family members working overseas. How do the economic prospects of overseas migrants affect origin-household investments—in particular, in child human capital and household enterprises? This paper examines Philippine households’ responses to overseas members’ economic shocks. Overseas Filipinos work in dozens of foreign countries, which experienced sudden (and heterogeneous) changes in exchange rates due to the 1997 Asian financial crisis. Appreciation of a migrant’s currency against the Philippine peso leads to increases in household remittances received from overseas. The estimated elasticity of Philippine-peso remittances with respect to the Philippine/foreign exchange rate is 0.60. In addition, these positive income shocks lead to enhanced human capital accumulation and entrepreneurship in origin households. Favorable migrant shocks lead to greater child schooling, reduced child labor, and increased educational expenditure in origin households. More favorable exchange rate shocks also raise hours worked in selfemployment, and lead to greater entry into relatively capital-intensive enterprises by migrants’ origin households.

Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants’ Responses to Exchange Rate Shocks

Why would migrant workers in rich countries ever return to poorer countries of origin? In a model of migration and household investment, with borrowing constraints and minimum investment thresholds, return migration occurs for either target-earnings or life-cycle reasons. This paper exploits a unique quasi-experiment to distinguish between these potential explanations for return migration. I examine how the return decisions of Philippine migrants respond to major and unexpected exchange rate shocks (due to the 1997 Asian financial crisis). Overall, the evidence favors the life-cycle explanation: more favorable exchange rate shocks lead to fewer migrant returns. A 10% improvement in the exchange rate reduces the 12-month return rate by 1.4 percentage points. However, there is evidence that some migrants are motivated by target-earnings considerations: for households with intermediate levels of foreign earnings, more favorable exchange rate shocks have the least effect on return migration, but lead to increases in entrepreneurial income, real property purchases, and vehicle ownership. Overall, the findings are at odds with a model with relaxed constraints on borrowing for household investment.international migration, intertemporal labor supply, credit constraints, exchange rate shocks, entrepreneurship, Asian financial crisis

Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002

How well do countries cope with the aftermath of natural disasters? In particular, do international financial flows help buffer countries in the wake of disasters? This paper focuses on hurricanes (one of the most common and destructive types of disasters), and examines the impact of hurricane exposure on resource flows to developing countries. Using meteorological data on storm paths, I construct a time-varying storm index that takes into account the fraction of a country's population exposed to storms of varying intensities. Across developing countries, greater hurricane exposure leads to large increases in foreign aid. For other types of international financial flows, the impact of hurricanes varies according to income level. In the poorer half of the sample, hurricane exposure leads to substantial increases in migrants' remittances, so that total inflows from all sources in the three years following hurricane exposure amount to roughly three-fourths of estimated damages. In the richer half of the sample, by contrast, hurricane exposure stimulates inflows of new lending from multilateral institutions, but offsetting declines in private financial flows are so large that the null hypothesis of zero damage replacement cannot be rejected.

International Migration and Human Development

This paper reviews the relationship between international migration and human development. First, it reviews what we know about the factors that drive migration from developing to developed countries. Second, it reviews existing knowledge about the impact of international migration and remittances on the economic and human development of migrants’ source countries. These first two sections of the paper are accompanied by an assessment of the gaps in our knowledge that need to be filled with further research. The last section of the paper outlines policies that could help raise the development impact of migration and remittances. First, governments should extend absentee voting rights to overseas citizens. In addition, facilitating migrants’ access to and use of financial services could bring substantial benefits. Furthermore, governments can profitably devote self-discovery and enterprise promotion efforts to small-scale activities. Finally, there could be substantial benefits from encouraging overseas citizens to retire at home while taking advantage of accumulated retirement benefits from their migration host countries.International migration, remittances, human development

Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines

Do remittances sent by overseas migrants serve as insurance for recipient households? This paper examines how remittances sent by overseas migrants respond to income shocks experienced by Philippine households. Because household income and remittances are jointly determined, we exploit rainfall shocks as instrumental variables for income changes. In households with overseas migrants, we find that exogenous changes in income lead to changes in remittances of the opposite sign, consistent with an insurance motivation for remittances. In such households, we cannot reject the null hypothesis of full insurance: on average, essentially all of exogenous declines in income are replaced by remittance inflows from overseas. By contrast, changes in household income have no effect on remittance receipts in households without overseas migrants. Remittance receipts may also be partly shared with others: in migrant households, net gifts to other households move in the same direction as remittance receipts in response to income shocks.remittances, migration, insurance, risk, instrumental variables, rainfall, Philippines

Experimental approaches in migration studies

The decision of whether or not to migrate has far-reaching consequences for the lives of individuals and their families. But the very nature of this choice makes identifying the impacts of migration difficult, since it is hard to measure a credible counterfactual of what the person and their household would have been doing had migration not occurred. Migration experiments provide a clear and credible way for identifying this counterfactual, and thereby allowing causal estimation of the impacts of migration. The authors provide an overview and critical review of the three strands of this approach: policy experiments, natural experiments, and researcher-led field experiments. The purpose is to introduce readers to the need for this approach, give examples of where it has been applied in practice, and draw out lessons for future work in this area.Population Policies,Access to Finance,Remittances,Anthropology,Debt Markets