Abundance from Abroad: Migrant Income and Long-Run Economic Development
Gaurav Khanna, Emir Murathanoglu, Caroline Theoharides, Dean Yang
American Economic Review · 2026 · Volume 116 · Issue 4
Abstract
We study how international migrant income prospects affect long-run development in origin areas. We leverage the 1997 Asian Financial Crisis exchange rate shocks in a shift-share identification strategy across Philippine provinces. Initial migrant income shocks are magnified six-fold over time, increasing domestic income, education levels, migrant skills, and high-skilled migration. Remarkably, 74.9 percent of long-run income gains come from domestic rather than migrant income. Trade driven impacts of exchange rate shocks are orthogonal to effects via migrant income. A structural model reveals that 19.7 percent of long-run income gains stem from educational investments. International migration fosters broad economic development in origin communities.
Keywords
International Migration, Foreign Exchange, Financial Crises, Human Capital, Skills, Occupational Choice, Labor Productivity, Labor Standards: Labor Force Composition, Economic Development: Human Resources, Human Development, Income Distribution, Migration, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance
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