Consequences of Labour Migration on Wages and Employment: Evidence from India

Abstract

This paper evaluates the impact of migration on the labour market outcomes of non-migrant workers in India using unit-level data from the ‘Employment Unemployment and Migration Survey’ (NSSO 64th Round, 2007–2008). After correcting for endogeneity bias of migration using an instrument variable approach, the overall results of the study suggest that the inflow of migrant workers increases the wages of non-migrant workers but does not affect their employment. Disaggregating the analysis by sectors, the study finds a positive wage effect in the formal sector, which is more pronounced among the high-skilled workers. In the informal sector, the results indicate an adverse employment effect among both high- and low-skilled workers. The positive wage effect in the formal sector suggests complementarity between migrant and non-migrant workers. The adverse employment effect in the informal sector is possibly due to a preference for migrant workers over non-migrant workers. The estimated results are consistent with alternate specifications.