Reciprocity in migration policy and labor market integration: A lab experiment

Abstract

We experimentally study policy variations to examine economic migrants’ willingness to relocate to, and take up work in, a destination country, and, in turn, destination country citizens’ willingness to allow economic migrants to relocate to and pursue formal work in their country. We focus on economic migrants coming from less developed countries and citizens of more developed destination countries and find clear evidence for a reciprocal relationship between the individuals in these roles. The labor market participation of economic migrants co-moves with destination countries’ openness to welcoming them. However, open migration policy without the threat of restrictions leads to lower migrant labor market participation than when the threat of restrictive policies looms. Yet, while the existence of such a threat encourages migrants to work, the actual implementation of restrictive policies reduces migrants’ willingness to work. We conclude that thoughtful and balanced migration policies that consider the reciprocal relationship between migrants and citizens are crucial to support mutually beneficial co-existence in society.