81462 enGender Impact: The World Bank’s Gender Impact Evaluation Database Split Decisions: Family Finance When a Policy Discontinuity Allocates Overseas Work Author(s) Michael Clemens and Irwin Tiongson Contact etiongson@worldbank.org Country Philippines Organizing Theme Economic Opportunities and Access to Assets, Education and Skills Status Completed Intervention Category Migration Permits Sector Migration and Remittances Labor markets are increasingly global. Overseas work can enrich households but also split them geographically, with ambiguous net effects on decisions about work, investment, and education. These net effects, and their mechanisms, are poorly understood. This study investigates a policy discontinuity in the Philippines that resulted in quasi-random assignment of temporary, partial-household migration to high-wage jobs in Korea. This allows unusually reliable measurement of the reduced-form effect of these overseas jobs on Abstract migrant households. A purpose-built survey allows nonexperimental tests of different theoretical mechanisms for the reduced-form effect. The study also explores how reliably the reduced-form effect could be measured with standard observational estimators. It finds large effects on spending, borrowing, and human capital investment, but no effects on saving or entrepreneurship. Remittances appear to overwhelm household splitting as a causal mechanism. Gender Connection Gender Informed Analysis Gender Disaggregated: consumption, access to healthcare, property, savings, school Gender Outcomes performance, intrahousehold bargaining IE Design Regression discontinuity In 2004 the Philippines signed a new agreement with the Republic of Korea that would allow Phillipinos to participate in the Employment Permit System (EPS). In order to participate in the program, the applicant must score above a certain threshold on a basic Intervention skills test. Individuals who passed the test would then migrate to Korea, where they would typically be employed in low-skilled manufacturing earning about $800 per month. The typical cost of applying and starting a job in Korea is about $550-700. Intervention Period The bilateral agreement was signed in 2004. The job contracts last 3 years. In 2004 the Philippines signed a new agreement with the Republic of Korea that would allow Phillipinos to participate in the Employment Permit System (EPS). EPS jobs are only accessible to people 18-39 years old, with either a high school or vocational degree and two Sample population years of work experience, or a tertiary degree and one year of work experience. In order to migrate,, applicants must score at least 120 points out of 200 points on a basic exam. Individuals who scored within 5 points of the cutoff are included within the analysis. In total, 3416 applicants were in this range. Also, in 2010, the researchers conducted a survey Last updated: 14 August 2013 1 enGender Impact: The World Bank’s Gender Impact Evaluation Database of the households of EPS applicants who scored near the threshold. 1532 households were successfully located. 20% of the applicants of the program are female. The study compares individuals who just exceed the score on the basic exam to individuals Comparison conditions who barely do not meet the score. The unit of analysis was the remaining household members of a family where an individual Unit of analysis has migrated. The evaluation looks at immigrants who migrate from 2005-2010 with a specific survey Evaluation Period carried out in Feb/March 2010 The results show that migration by one household member causes large increases in remaining household members’ spending on health and education, quality of life, and durables, but no increases in savings. Migration causes substantial reductions in borrowing from family members outside the household. The authors find no significant effect on starting or investing in entrepreneurial activity or on labor supply by other family members. Migration by the applicant causes children to be much more likely to attend private school Results and receive awards at school. Migration causes large changes in decision making power between household members, but nonexperimental evidence suggests that most of the migration effect arises through the remittance mechanism rather than through changing household decision-making. The authors find some evidence that migration affects home production technology, particularly in agriculture, by altering household composition. They find that widely-used nonexperimental estimators of migration effects can, in the same data, spuriously attribute causation to self-selection. Because of the small number of female applicants, the study does not have the power to Primary study limitations determine how the effects of migration depend on gender. Funding Source John D. and Catherine T. MacArthur Foundation Clemens, M., & Tiongson, E. (2012). Split Decisions: Family finance when a policy Reference(s) discontinuity allocates overseas work. World Bank Policy Research Working Paper, (6287). Link to Studies http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-6287 Microdata Last updated: 14 August 2013 2