2019/03. Regional Migration and Wage Inequality in the West African Economic and Monetary Union
Esther Mirjam Girsberger, Economcis Discipline Group, University of Technology Sydney & IZA; Romuald Meango, Max-Planck Institute for Social Law and Social Policy, Munich; Hillel Rapoport, Paris School of Economics, Universit´e Paris 1 Panth´eon-Sorbonne, CEPII & IZA
Date of publication: 21st February 2019
Working paper number: 03
This paper investigates the impact of regional migration on average wages and wage inequality in the West African Economic and Monetary Union (UEMOA). We exploit a unique data from a unified labour force household survey which covers natives and migrants in the seven economic capitals of the region. We estimate the counterfactual wage distributions of UEMOA migrants in absence of migration to evaluate the effect of regional migration. We find that regional migration increases the average wage by 1.8% and it entails a decrease in inequality in the UEMOA region between -1.5% (for the Gini coefficient) and -4.5% (for the interquartile ratio). The decrease in inequality in the UEMOA region is driven by a reduction in inequality between countries, while the migration effect on within-inequality differs across countries and remains overall small. When accounting for possible general equilibrium effects of migration on stayers’ wages, we find a similar or even stronger decrease in inequality, yet a smaller increase in the average wage. With general equilibrium effects, (negatively-) intermediately selected UEMOA migrants depress the average wage of natives in their host country and lead to a slight increase of the average wage among natives in the sending country, with the former effect dominating. Moreover, regional migration in the UEMOA mostly flows from countries with low wages to countries with higher wages. In combination with the general equilibrium effects described above this leads to a larger decrease in between-country inequality than in a setting with exogenous wages.