Anna Gasten

(University of Göttingen)

will give a presentation on

Are FDI restrictions inducing international migration? Evidence from Indonesia

Abstract:  Using disaggregated dyadic panel data on international migration flows from Indonesian districts, this paper provides causal evidence for Foreign Direct Investment (FDI) and international migration being substitutes. Our empirical analysis exploits regulatory changes in the Negative Investment List, a product-specific FDI policy, that have been implemented by the Indonesian government from 2007 to 2014. Using a shift-share approach to measure the district-country-pair-level exposure to the sector-specific tightening of FDI regulation, we analyze the impact of changes in bilateral FDI inflows on international migratory movements of the population living in FDI receiving areas. We document that relative reductions in dyadic FDI inflows in the aftermath of the reform triggered an increase in emigration to the investor countries, especially among those with tertiary education.