Do bilateral labor agreements increase migration? Global evidence from 1960 to 2020

Abstract

We use comprehensive data on bilateral labor agreements (BLAs) and migration across all country pairs from 1960 to 2020 to estimate the impact of BLAs on migration. In our preferred specification, which includes a rich set of fixed effects, BLAs increase migration by 68 percent (or 0.52 log points) within a decade. Among regular corridors—those with at least ten migrants in each period of the sample—migration increases by 21 percent (or 0.19 log points). Effects are stronger for BLAs involving low- and lower-middle-income origin countries, but are negligible for origin countries in Africa, likely driven by weaker institutional capacity for implementation. Our estimates imply substantial welfare gains through increased migrant earnings. Low- and lower-middle-income countries can gain US$116 million annually from a BLA with a regular destination. If countries in sub-Saharan Africa were to experience similar effects, welfare gains could be as high as US$54 million annually.