Migration and Institutional Quality: the case of Romania

1. Migration and Institutional Quality: the case of Romania Boris Najman Raluca Prelipceanu CES (University of Paris 1) European Population Conference, Barcelone 9th-12th July 2008

2. Background (1) • Romania is the second largest populated country among the new EU members (21.7 million inhabitants) • Romania and Poland are the main migrant sending countries within the E.U • Romania is the source country for about 2.5 million temporary migrants and over 3 million permanent migrants (2002)

3. Background (2) • Continuous population decrease between 1992 and 2002 (1.1 mln or 5 % of the population; EBRD, 2007). • Internal migration trajectories : rural to urban (in the 70s-80sand early 90s), urban to rural (mid 90s) • From commuters to international migrants

4. Background (3) • Dramatic fall of the GDP in the beginning of the 90th • Increasing level of poverty and high inequality in its distribution • High levels of unemployment correlated with urban to rural migration • Increasing weakness of institutions unable to provide public goods to all citizens • Spread of corruption at all levels

5. Census Census Sources: EBRD, 2007

6. Between the last two population censuses – January 1992 and March 2002, Romania lost 1,1 million inhabitants Source: National Institute of Demography 2006

7. Stages of international migration (1)

8. Stages of international migration (2)

9. Sources: UNDP; 2007

10. Labour migration rates by regions Source: Sandu 2005

11. Motivations (1) first supplier country in the EU along with Poland • only a few papers deal with economic analysis of the Romanian migration • No comparison between international and internal migration • Our results will be significant at national level

12. Main Questions • What are the generic determinants of the Romanian temporary labour migration? • Does local institutional quality influence migration? • Do migration determinants differ according to destination (internal and international)?

13. Research Hypotheses (1) • Main hypothesis: The quality of local institutions has an impact on migration • When good quality public goods are not provided by local institutions, households need to pay to gain access to these goods • individuals recurr to migration in order to alleviate their budgetary constraint • The effect of local institutional quality on the decision to migrate is not linear but passes by the household’s level of wealth

14. Research hypotheses (2) Additional hypothesis: • Individuals make their decision to migrate differently according to destination (international and internal migration)

15. Literature Review • Harris and Todaro (1970): individual decision making • migration is due to labour market segmentation, shortage and wage inequality. • Mincer (1978): migration decision at the level of the family • The New Economics of Labour Migration: capital, credit and insurance market imperfections, relative deprivation (Stark and Levhari 1992, Stark and Taylor 1990) • The social capital approach: Massey & Garcia Espana 1987, Massey 1999, Winters & al. 2001, Rapoport & McKenzie 2007 • The influence of the level of local development (Beauchemin and Schoumaker 2004) • Comparative approaches: Taylor &Mora (2005) and Stark (1991)

16. Data Description • 10 % of the Romanian 2002 Census • The database contains 2.136 million observations out of which 841.056 workers • individual, household and regional level data • Data on local institutional quality and public goods provision: computed from UNDP, IPP and the National Institute of Statistics

17. Data Limitations • We do not have panel data, the study is in cross-section (cannot account for the forth and back movements: circularity) • Census data not very adequate to study migration: no record for permanent migration (specific link in case of Romanian migration) • For temporary migration: filters - location of workplace - reason of absence - duration of absence

18. Data Limitations • At the origin: do not know locality: cannot test the network hypothesis • The database does not contain information on countries of destination At the level of internal migration: • - difficult to separate commuters from longer-term migrants (use long-distance migrants) • - do not know the destination (only if another county and if rural or urban)

19. Data Limitations Difficulties in testing the institutional quality hypothesis: • no indications on the actual income of the households (we build a Living Conditions Indicator instead) • no indications on the actual household expenditures for education and healthcare

20. Description of Variables • Individual level : sex, age, age², education, education2, double nationality, civil status, household head, mother tongue • Household level: household size, share of women, dependancy ratio, number of migrants in the household, wealth Index, rooms/person, rooms/person², average education of women in the household. • Labour market variables: sector of employment • Institutional level: Healthcare Indicator at the regional level, Educational Indicator at the regional level interactive variables: Wealth Indexx Healthcare Indicator, Wealth Indexx Educational Indicator

21. Public goods provision Healthcare Index = (infant mortality rate lagged + ln (number of persons/hospital bed) + ln (number of persons/doctor))/public expenditure on healthcare at the local level Educational Index = (number of pupils/teacher in primary and secondary education + number of children not attending school in primary and secondary)/ public expenditure on education at the local level

22. International labour mobility Internal labour mobility Labour Migration Strategies No mobility

23. Labour mobility: breakdown

24. Econometric model Multinomial Logit (EM/IM/NM) M i =β0+ β0 gender + β2 age + β3 age2 + β4 education + β5 education2 + β4 hhead + β5 sharewomen + β6 hsize + β7 number of international migrantsin the household + β8 number of internal migrants in the household + β9 dependency + β10 wealth index + β11 rooms/pers + β12 rural + β13 economic sector + β14 wealth index x educational indicator + β15 wealth index* healthcare indicator + β16 educational indicator + β17 healthcare indicator + εi

25. Regression results for international migration(individual level variables) * Not significant

26. Regression results for international migration(household level variables)

27. Regression results for international migration(labour market variables)

28. Regression results for international migration(institutional level variables)

29. Regression results for internal migration(individual level variables) *not significant

30. Regression results for internal migration(household level variables) * Not significant

31. Regression results for internal migration(labour market variables) * Not significant

32. Regression results for internal migration(institutional level variables) (*) Not significant

33. Summary of results (International vs internal) • Men have a higher probability to migrate both internationally and internally • Age and education have positive non-linear effects in the case of international migration and negative non-linear effects in the case of internal migration • Marriage decreases both international and internal migration • Household heads are less likely to migrate

34. Summary of results (International vs internal) • Ethnicity increases the probability to migrate abroad and decreases that of internal migration • The size of the household and the rural area also increase the probability to migrate • The wealth index has a positive effect for international migration and a negative one for internal migration • Institutional variables have positive effects for international migration and negative effects for internal migration • The interactive variables for institutional quality have negative effects in the case of international migration

35. Conclusions and further developments • We find that the standard determinants sex, age, education, marital status, the wealth index, size of the household, number of migrants influence the probability of migration in the expected sense • We find that the local institutional quality has an impact on the decision to migrate which varies according to the type of migration The richer the household the smaller the likelihood of the individual to become an international migrant when the quality of local institutions is poor.

36. Conclusions and further developments (3) We find differences between international and internal migration Their response to local institutional quality We underline the importance to have local institutions able to provide good quality public goods equally to all individuals: equity Policies to promote the mobility of women and their access on the labour market