UC Berkeley

Abstract

Essays in The Economics of Emigration and The Lifecycle Deficit in Ethiopia

by

Teferi Mergo

Doctor of Philosophy in Economics

University of California, Berkeley

Professor Ronald Lee, Chair

This work explores the effects of international migration on sending families, and the lifecycle deficit in Ethiopia. The first two chapters examine the effects of emigration on the living standards and health of the sending families, using (for identification) the Diversity Visa (DV) lottery program - a migration channel through which about a million people have relocated to the US since 1995. The random assignment of migration opportunities allows estimation of experimental treatment effects.

In chapter 1, I use data from a survey of Ethiopian DV participants to study the causal effects of emigration. I infer that migration contributes positively to the wellbeing of source families. Overall, migrant sending families spend about 22% more on food and 41% more on energy, reflecting their improved standard of living. They have better quality durables, drinking water and sanitation facilities. However, migration does not improve the senders' saving, bank use and business ownership. The positive treatment effects do not diminish with longer stay of emigrants abroad. Migrant men contribute more to the increase in their families' standard of living than their female counterparts do. I find that DV participants are favorably selected relative to the overall population.

In chapter 2, I exploit the survey on Ethiopian DV participants (lottery winners and non-winners) to explore the health effects of emigration on those left behind. I find that the health effects of emigration are mixed. Migration increases overall BMI of those remaining behind by 0.56, contributing affirmatively to physical health of about 80% of them, while causing an uptick in the obesity rate by 5%. It increases the incidence of vascular diseases and diabetes by 10%, and has adverse effects on the mental health of the migrant senders. Adults fare poorly in terms of the less desirable health effects of migration.

Chapter 3 estimates the support ratio for Ethiopia, using the US Census Bureau's population projections by age and the method developed by the National Transfer Accounts (NTA), which employs the age-profiles of labor income and consumption. Ethiopia has a labor income profile with high youth and old-age earnings, much like a typical poor agrarian country with low savings, low levels of upward public transfers and low levels of schooling. Interestingly, private consumption declines more than moderately in the country with age, beginning in the early 30's, implying that poverty might be pronounced in older age groups. The average Ethiopian consumes more than s/he produces for roughly half the number of years s/he can expect to live. The support ratio for Ethiopia is expected to increase for another generation or so, potentially augmenting its per-capita income.