Migration from low-income to high-income countries is one of the most contentious socioeconomic phenomena of our times. The vast differences in incomes and living conditions between countries result in very high aspirations to migrate internationally, which are projected to increase even further over the decades to come (Hanson and McIntosh 2016). According to the African Youth Survey 2024, for instance, 58% of young Africans state that it is likely that they will leave their country in the next three years (Ichikowitz Foundation 2024).
The ‘root cause’ strategy behind foreign aid allocation
In response, policymakers in high-income countries make use of foreign aid as a strategy to mitigate the ‘root causes’ of migration in developing regions, such as poverty and food insecurity, conflict, or a lack of employment opportunities (Harter and Aksoy 2022, Paniagua et al. 2022). This approach has led to significant investments, such as the EU’s €5 billion Emergency Trust Fund for Africa, to stabilise and improve conditions in selected African regions and reduce irregular migration from those origins (European Commission 2015). Likewise, the US and the UK have implemented similar strategies targeting migration from Central America, Africa, and the Middle East (National Security Council 2021, UK Government 2024).
Evidence gaps in the aid effectiveness and migration literature
In contrast to the importance that the ‘aid against migration’ strategy enjoys among policymakers, the effectiveness of foreign aid in general, and its effects on migration in particular, remain highly debated among economists (Lohmann et al. 2015, Clemens and Mendola 2024). While some argue that aid can improve living standards and thus reduce the desire to migrate, others suggest that better living conditions may enable people to migrate in the first place by providing them with the necessary resources. The fundamental empirical challenge at the heart of the debate is that there can be factors that simultaneously affect aid and migration, thus making it difficult to estimate the causal relationship between the two. In a new paper (Fuchs et al. 2024), we analyse how foreign aid affects individual migration preferences and aggregate migration flows over different time horizons and across the entire developing world, along with the underlying mechanisms, to provide novel causal evidence on this fundamental question related to both labour mobility and development.
Global georeferenced microdata
We combine individual survey data from nearly one million individuals across 106 developing countries from the Gallup World Poll (GWP) with georeferenced data on World Bank project announcements and disbursements and bilateral migration flows between 2008 and 2019. Figure 1 illustrates the average share of GWP respondents who indicate they prefer to migrate abroad by subnational region between 2008 and 2019. Exceptionally high migration preferences are reported across many regions in Sub-Saharan Africa and parts of the Middle East and South America.
Figure 1 Average migration preferences by subnational region, 2008-2019
Notes: This figure depicts the average share of interviewed individuals who indicate a preference to migrate by ADM1 region between 2008 and 2019. This is based on the Gallup World Poll question: “Ideally, if you had the opportunity, would you like to move permanently to another country, or would you prefer to continue living in this country?”
Source: Fuchs et al. (2024).
Announcements versus disbursements
The study employs two distinct causal identification strategies to estimate: (i) the immediate effects of announcing an aid project using an event study, and (ii) the short-term to longer-term effects of project disbursements by means of an instrumental variable approach. Our first approach is an event study that examines the immediate effects of new World Bank project announcements on migration preferences by comparing survey responses captured shortly before and after the announcement, controlling for individual characteristics and fixed effects. Our second approach tracks local aid disbursements over time and instruments them using synthetic disbursements that capture plausibly exogenous variation in the amount of project funding inflows to recipient provinces. This solves the empirical challenge that the timing of disbursement may react to shocks, such as natural catastrophes or conflict episodes, that could simultaneously affect migration.
Short- versus longer-term effects
In the short term, the announcement and disbursement effect estimates of World Bank projects in aid-receiving provinces indicate a temporary reduction in migration preferences and irregular migration. These effects are particularly strong among younger individuals and those with access to mobile internet, i.e. those with typical characteristics of prospective migrants (Aksoy et al. 2022). This reduction in migration, linked to increased optimism about future prospects and higher trust in national institutions, lasts up to three years after disbursements. During this period, irregular migration to OECD countries decreases by about 8% in response to the average annual World Bank disbursement at the recipient country level $130 million.
In contrast, over the longer term of 3-5 years, the results show that World Bank aid projects improve local economic conditions significantly in terms of income and poverty levels. At the same time, regular migration to OECD countries then increases by 6-7% in response to the average annual disbursement by the World Bank, while irregular migration remains unaffected. Consistent with the mobility transition theory, the latter effect is particularly pronounced among poorer individuals.
In summary, these results reveal a mobility pattern where short-term aid allocation boosts individual expectations, leading to a reduction in irregular migration. In the longer term, the improved individual welfare then leads to an increase in regular migration. Heterogeneity analyses reveal, for example, pronounced regional differences in the effects of foreign aid on migration, suggesting that such policies are effective for decreasing (irregular) migration from the Middle East and North Africa, but fail to work in more fragile contexts, such as Sub-Saharan Africa.
Policy implications: Mixed results of the ‘root causes’ strategy
The findings carry important implications for policymakers. On the one hand, and in support of the ‘root causes’ strategy, foreign aid can indeed help reduce irregular migration by temporarily lowering migration aspirations in aid recipient countries. However, as foreign aid boosts incomes in the longer term, it also translates into larger regular migration, as postulated by the ‘mobility transition’ theory. Thus, while aid can reduce irregular migration pressure temporarily, it may lead to higher regular migration over time. Policymakers should thus be willing to accept this trade-off when designing ‘root causes’ migration policies. While many voters and politicians in high-income countries oppose irregular migration strongly, regular migration can be managed better to increase welfare effects for domestic voters.
The results also highlight the importance of considering the heterogeneity of foreign aid impacts across different regions. In more stable environments, aid can be more effective in reducing migration pressures. But in fragile states, other interventions may be required to achieve similar outcomes. Overall, the findings underscore the complexity of using aid as a tool for migration management and the need for a comprehensive, long-term approach to address the reasons for migration at the origin.
The ‘root causes’ strategy should be viewed as an effective instrument of a broader migration policy toolbox. Combining policies that align incentives for both governments and potential migrants will likely be more effective in managing migration than simply increasing migration costs, such as through border walls (Allen et al. 2018), greater punishments for irregular border crossings (Bazzi et al. 2021), removing search and rescue operations at sea (Deiana et al. 2024) decreasing legal migration channels (Clemens et al. 2018, Abramitzky et al. 2023), or reducing migrant benefits at destination (Agnersnap et al. 2020, Dustmann et al. 2024). Preferably, donor governments should consider ways in which aid and migration can be combined effectively to improve the long-term development of origin countries (Khanna et al. 2024).
References
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