Unraveling the Market Structure Behind International Migration

Investigators: CDEP Affiliate Suresh Naidu, with Shing-Yi Wang and Yaw Nyarko.

Suresh Naidu, with Shing-Yi Wang and Yaw Nyarko, is investigating the human supply chain that recruits workers from India to work in construction jobs in the UAE.  Working with the UAE ministry of labor,  UAE construction companies, and global labor sourcing companies, the authors are evaluating training and recruitment programs in Indian recruitment centers, from Tamil Nadu to Bihar to Uttar Pradesh, where workers queue and are screened for construction jobs in the UAE.

Research questions include evaluating the potential of migration for poverty alleviation, by examining both the degree of selection into applying to migration as well as experimental estimates of the return to migration. The returns to migration will be measured comprehensively, and includes not just wages, but comprehensive measures of freedom, subjective well-being, health, and social ties and networks.

The other major research question includes unpacking the layers upon layers of brokers, agents, and sub-brokers that constitute the human supply chain. Workers show up in the UAE burdened by debts taken out to finance broker fees, and much of the surplus from migration may be benefitting labor market intermediaries rather than workers.  Preliminary estimates suggest that brokers are capturing 25% of the earnings from a two-year migration spells. Using both survey and ethnographic evidence, together with an audit study with brokers, the authors hope to learn the barriers to entry or information asymmetries that enable capture of migration returns by labor market intermediaries.

Published as "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.

The project is part of CDEP’s Firms and Innovation Initiative.

Prospective migrant workers doing simple construction skills test.