Worker Mobility in a Global Labor Market: Evidence from the United Arab Emirates

December 19, 2014

Investigators: CDEP Affiliate Suresh Naidu, Yaw Nyarko from New York University and Shing-Yi Wang from Univeristy of Pennsylvania.

In 2011, a reform in the UAE allowed any employer to renew a migrant's visa upon contract expiration without written permission from the initial employer. The study found that the reform increased incumbent migrants' earnings and firm retention of these workers. This occurs despite an increase in employer transitions, and is driven by a fall in country exits. While the outcomes of workers already in the UAE improved, the analysis suggests that the reform decreased demand for new migrant workers and lowered their earnings. These results are consistent with a model in which the reform reduces the monopsony power of firms.

Published as "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, Vol 124, No 6, December 2016.