The two-way relationship between international migration and institutional quality in the migration and development nexus

Abstract

The two-way relationship between international migration and institutional quality is at the core of migration and development interconnections. Migration decisions are shaped by various types of institutions, and subsequently alter the quality of institutions in both home and host countries. This thesis empirically examines the two-way relationship between international migration and institutional quality at the country and cross-country levels. Three studies on the return decisions and intentions of Vietnamese migrants are presented, which elucidate the role of institutional quality in explaining migration. Subsequently, a panel analysis that involves across-country-and-time comparisons is presented that investigates the development role of migration in improving institutional quality in home countries.

In the first study, binary and multinomial regression models are fitted to identify the determinants of Vietnamese return migrants’ location choices when registering for permanent residency back in their home country. The analysis reveals that institutional quality at the local level has a positive role in these migration decisions. Moreover, the revealed effect differs with the characteristics of migrants: regions with better institutional quality are more attractive both to younger return migrants and to those who have returned from host countries with better institutional quality.

The second study uses data from a web-based survey conducted in OECD countries in 2016 to examine determinants of the intentions to repatriate among Vietnamese migrants. Logistic regression results suggest that Vietnamese migrants who attach greater importance to the institutional quality in Viet Nam are less likely to have the intention to return than others. However, there is considerable heterogeneity by gender. The concern about institutional quality in Viet Nam is only statistically significant for males.

The third study attempts to measure the implicit monetary value of institutional quality, elicited via the return migration channel using the contingent valuation method. More specifically, this study estimates the willingness to pay for an improvement in institutional quality in Viet Nam. Based on survey data on Vietnamese migrants living in New Zealand collected in 2016, the estimated willingness to pay for a one-unit improvement on a scale of institutional quality is, on average, NZD 79.80 per week, and positively associated with the respondents’ age and the importance of institutional quality in Viet Nam to their repatriation intentions.

The fourth study investigates the influence of diasporas in OECD countries on institutional quality in home countries. Particularly, the heterogeneity of diasporas is taken into account, in terms of their distribution across host countries and duration-of-stay. A modified measure of diaspora size, namely institutional-quality-adjusted immigrant stocks, is developed to allow for variations in institutional quality between host countries. Duration-of-stay in the host country is utilized as an indicator of the strength of interaction with home countries. Cross-sectional and panel analyses find a significant positive impact of diasporas in OECD countries on institutional quality in home countries. Remarkably, the diffusion of advanced institutions from developed host countries to home countries through the international migration channel is stronger with diasporas characterized by shorter duration-of-stay.

In general, the empirical findings of this thesis underscore the important role of good institutional quality in governing migration for development.