Impacts of applying for international labor migration before migration occurs

Abstract

The process of international labor migration is often initiated when potential migrant workers apply for jobs offered by recruitment agencies. This paper reports the first study on the consequences of this initial process of applying for labor migration, before migration occurs. In Fiji, a private recruitment agency defrauded approximately 20,000 people of application fees for labor migration to the Middle East. I conducted a rural household survey after people made application decisions and before they became aware of the fraud. I address the endogeneity of job application by using a fraud-specific factor––proximity to the fraudster––as an instrumental variable. Households with a job applicant received less domestic transfers from other households. The reallocation of transfers was a result of the substitution for prospective but not realized international remittances. Thus, the impacts of international labor migration and remittances extend beyond actual migration and remittances studied in the literature.