Intended versus unintended consequences of migration restriction policies: evidence from a natural experiment in Indonesia

Restrictive migration policy  at the places of origin, which restricted people from emigrating (migrating away) from a country, deteriorated the local labor market by pushing a higher percentage of women than men into informal and agricultural work but also led to an increase in junior secondary school enrollment.

• The moratorium did not lead to higher unemployment of men or women, but it did lead to a deterioration in the local labor markets of the places of origin by pushing more male and female workers into informal employment and employment in agriculture, with larger impacts on women than for men
  • There was a 3.8% increase in informality for men compared to a or 4.2% (1.3 percentage points) increase for women in treatment districts which corresponds to an increase in the number of female informal workers by approximately 132,000.
  • There was a 5.8% (2.3 percentage points) increase in employment in agriculture in treatment districts for men compared to a 6.8% (1.6 percentage points) increase for women. This corresponds to an increase by over 200,000 female and 400,000 male workers in agriculture in treatment districts over the period following the moratorium.
• There was no detectable change in the consumption patterns of Indonesian households as a result of the moratorium, suggesting that rural areas in Indonesia could absorb the sudden increase in the availability of workforce.
• There was an increase in junior secondary school enrollment of both males and females in treatment districts, which reflects the importance of the maternal presence in the household for the schooling trajectory of children.
  • There was an increase in male enrollment in junior secondary school by 4.8% (3.1 percentage points) and in female enrollment by 5.8% (3.8 percentage points).

This study found that migration policy that primarily restricted the international movement of women domestic workers from Indonesia led to positive consequences (higher rate of junior secondary school enrollment) and negative consequences (higher rate women being pushed into “last-resort” jobs in informal and agricultural economies). Instead of imposing migration moratoriums, the study suggests that countries work to create more transparent and flexible policies to regulate international work forces, providing safety, protection, and smooth transitions for workers who choose to migrate.

The study is based on a natural experiment in Indonesia where the study used a difference in differences approach to compare the outcomes of interest in districts of origin for migrants to Saudi Arabia (i.e. districts where the majority of female migrants in 2005 traveled to Saudi Arabia) with the control districts (i.e. all other districts in Indonesia). Thus, control districts include origin regions of migrants towards all other international destinations. Overall, there were 54 treatment districts and 243 control districts, with observations distributed uniformly across regions in Indonesia.

The impact of the 2011 moratorium was measured based on data from the National Labor Force Survey (Sakernas) and the National Household Consumption Survey (Susenas) of Indonesia. These household surveys are collected every year at the national level and offer representative socio-economic information for individuals at the district level. Treatment status was measured using information from the Podes village census, which includes information about village geographic characteristics, infrastructure, political participation, main sources of economic activity and number of village residents working abroad as documented migrants (TKI) during the survey year.

In 2005, Podes also collected information on the main destination country for people emigrating from each village, and the gender breakdown of the total number of migrants was also collected. The 2005 Podes dataset was used to identify the villages that, prior to the 2011 moratorium, sent female migrants mostly to Saudi Arabia, those that sent female migrants to other destinations, and those that were not origin villages for female migrants.

The information was reported by the Head of the village and is based on administrative records of international migrants. The National Statistics Office (BPS) fully validated the statistical information included in each wave of the village census which further mitigates concerns on the reliability of the data on documented migrants in Podes.  Podes data are known to match well the aggregate number of documented migrants reported by BNP2TKI, as well as those obtained from national household surveys such as the National Labor Force Survey (Sakernas) and the National Household Consumption Survey (Susenas) of Indonesia. For all datasets, the most detailed level of disaggregation was at the district, so all data collected from the Podes 2005 was also aggregated at the district level.