Do Bilateral Labor Agreements Increase Migration? Global Evidence from 1960 to 2020

This paper estimates the impact of bilateral labor arrangements on migration between two countries. It uses comprehensive data on bilateral migration and bilateral labor agreements across all country pairs for each decade from 1960 to 2020, and employs an empirical specification with a rich set of fixed effects. In the preferred and most stringent specification, the findings show that signing a bilateral labor agreement increases migration from an origin country to a destination country by 76 percent (0.57 log points) in the decade of signing. The effect persists for up to three decades. The impacts are higher for corridors without a pre-existing regular flow and for destinations in the Gulf Cooperation Council. In contrast, the effect is virtually absent for origin countries in Africa, driven by countries with weak government effectiveness. The estimates imply that bilateral labor agreements can lead to substantial welfare gains: low- and lower-middle-income countries can earn an additional US$120 million annually from a bilateral labor agreement. If countries in Sub-Saharan Africa were to experience similar impacts, the welfare gain from a single BLA could be as high as US$51 million per year for these origin countries