The effect of exchange rate volatility on outward migration: A Synthetic Control Group approach

Subject Areas : International Economics

Tamina Asghari ¹ , Saeed Eisazadeh ² , Ali Akbar Gholizadeh ³

1 - PhD student in Financial Economics, Department of Economics, Bu- Ali Sina University, Hamadan, mail: [e-mail]
2 - Associate Professor, Department of EAssociate Professor, Department of Economics, Bu- Ali Sina University, Hamadan, Iran (Corresponding Author), mail: [e-mail]
3 - Associate Professor, Department of Economics, Bu- Ali Sina University, Hamadan, Iran, mail: [e-mail]

Received: 2023-10-10 Accepted : 2023-12-10 Published : 2024-02-10

Keywords: Emigration, B26, JEL Classification: B22, exchange rate jump, Synthetic Control Group, C69,

Abstract :

The purpose of this research is to investigate the effect of exchange rate jump on the outflow of migration using the Synthetic Control Group approach during the period of 1980-2015 in Iran. For this purpose, based on this approach, the countries with real exchange rate stability were selected and among them, the weighted composition of the countries that had the most similarity in the situation before the real exchange rate jump of Iran was estimated. Therefore, two groups were formed, including the group of selected countries named artificial Iran and the other, real Iran. Finally, the results of the estimates of these two groups were compared and analyzed. The results indicate a 15% difference in the immigration process of artificial Iran and real Iran. The analysis of the results showed that the impact of the jump in the real exchange rate on the migration flow in Iran was positive. Based on the results, it is suggested that policymakers pay attention to the destructive effect of real exchange rate jumps on the flow of migration from the country and adopt appropriate economic policies to stabilize the real exchange rate.

References:

- اصغری، مجتبی، حقیقت، علی، نونژاد، مسعود و زارع، هاشم (1398). پویایی‌های نرخ ارز در ایران با استفاده از مدل‌های تعادل عمومی پویای تصادفی (DSGE). مدلسازی اقتصادی، 13(46)، 192-171.
- افشاری، علی، معینی، سیدرضا و انصاری، حمید (1398). تاثیر آرمان گرایی توسعه‌ای جوانان تهرانی بر گرایش آن‌ها به مهاجرت. مطالعات راهبردی ورزش و جوانان، 43(26)، 52-27.
- رنانی، محسن، شیرازی، همایون و صادقی عمروآبادی، بهروز (1394). بررسی عوامل مؤثر در جریان خروج مهاجر از ایران با استفاده از مدل پانل پویا. فصلنامه تحقیقات اقتصادی، 3(49)، 376-337.
- رضایی، مریم و صادفی، رسول (1400). سودای مهاجرت: تمایل ایرانی ها به مهاجرت و عوامل تعیین کننده آن. پژوهش‌های جامعه شناسی معاصر، 10(18)، 62-35.
- خداویسی، حسن و وفامند، علی (1392)، مقایسه ی پیش بینی نرخ ارز براساس مدل های غیر خطی STAR و مدل‌های رقیب. فصلنامه مدلسازی اقتصادی، 2(23)، 20-85.
- صادقی، رسول؛ سیدحسینی، سیده متین. (1398). میزان تمایل جوانان به مهاجرت بین المللی و عوامل تعیین کننده آن در شهر تهران. فصلنامه مطالعات راهبردی ورزش و جوانان، 18(43)، 22-1.
- طاهری دمنه، محسن و کاظمی، معصومه (1397). تمایل به مهاجرت در بین جوانان؛ مطالعه ای کیفی در تصاویر آینده. فصلنامه مطالعات میان رشته‌ای در علوم انسانی، 10(4)، 78-53.
- عرب مازار، علی اکبر، مشرفی، رسام و مصطفی‌زاده، محمد (1396). مهاجرت نیروی کار از ایران به کشورهای OECD و عوامل اقتصادی مؤثر بر آن. فصلنامه اقتصاد و الگوسازی، 30(30)، 94-63.
- میری، ایوب و عیسی‌زاد، سعید (1402). ارزیابی تأثیرات سیاست ایجاد مناطق آزاد تجاری بر رشد منطقه ای با استفاده از روش کنترل مصنوعی. مطالعات اقتصادی کاربردی ایران، 12(46)، 240-207.
- Abadie, A. (2008). Using synthetic controls: Feasibility, data requirements, and methodological aspects. Journal of Economic Literature, 59(2), 391-425.
- Abadie, A., A. Diamond, and J. HainMueller. (2003). Synthetic control methods for comparative American. Statistical Association, 105 (490), 493-505.
- Afshari, A., Moeini, S. R., & Ansari, H. (2019). A study on relationship between Juveniles’ developmental utopianism and their tendency to migration. Strategic Studies on Youth and Sports, 18(43), 27-52. (in persian)
- Arabmazar, A., Moshrefi, R., & mostafazadeh, M. (2017). Iranian labor migration to OECD countries and economic factors affecting it. Journal of Economics and Modelling, 8(30), 63-94. (in persian)
- Asghari, M., haghighat, A., nonejad, M., & zare, H. (2019). The study of exchange rate dynamics in Iran by using dynamic stochastic general equilibrium (DSGE) models. Economic Modeling, 13(46), 171-192. (in persian)
- Alvarez, J., Arena, M. M., Brousseau, A., Faruqee, M. H., Corugedo, E. W. F., Guajardo, M. J., ... & Yepez, J. (2022). Regional spillovers from the Venezuelan crisis: migration flows and their impact on Latin America and the caribbean. International Monetary Fund, 13(20), 70-98.
- Brahim, M., Nefzi, N., & Sambo, H. (2017). Remittances and the real effective exchange rates in MENA countries: What is the long run impact? Hal open science, 10(16), 109-124.‏
- Brunow, S., Nijkamp, P., & Poot, J. (2015). The impact of international migration on economic growth in the global economy. In Handbook of the Economics of International Migration, 1, 1027-1075.
- Dincer, N., & Kandil, M. (2011). The effects of exchange rate fluctuations on exports: A sectoral analysis for Turkey. The Journal of International Trade & Economic Development, 20(6), 809-837.‏
- Doganlar, M. (2012). Estimating the impact of exchange rate volatility on exports: evidence from Asia countries. Appl. Econ. Lett, 9 (13), 859–863.
- Erten, B., & Metzger, M. (2019). The real exchange rate, structural change, and female labor force participation. World Development, 117, 296-312.‏
- Fofanah, P. (2020). Effects of exchange rate volatility on trade: Evidence from West Africa. Journal of Economics and Behavioral Studies, 12(3), 32-52.‏
- Ge, D., Long, H., Qiao, W., Wang, Z., Sun, D., & Yang, R. (2020). Effects of rural–urban migration on agricultural transformation: A case of Yucheng city, China. Journal of Rural Studies, 76, 85-95.
- ‏Gröger, A. (2021). Easy come, easy go? Economic shocks, labor migration and the family left behind. Journal of International Economics, 128, 103-409.‏
- Hintermann, C., & Fassmann, H. (1998). Potential East-West Migration. Sociologický časopis/Czech Sociological Review, 6(1), 59-72.‏
- Keita, S. (2016). Bilateral real exchange rates and migration. Applied Economics, 48(31), 2937-2951.‏
- Kreif, N., Grieve, R., Hangartner, D., Turner, A. J., Nikolova, S., & Sutton, M. (2016). Examination of the synthetic control method for evaluating health policies with multiple treated units. Health Economics, 25(12), 1514-1528.‏
- Khodavaisi, H., & Vafamand, A. (2013). Comparing the exchange rates predicted by STAR non-linear models and alternative models. Economic Modeling, 7(23), 85-103. (in persian)
- Lewis, W. A. (1954). Economic development with unlimited supplies of labour.‏ The Manchester School.
- McDonald, C. (2013). Migration and the housing market. Analytical Note. Reserve Bank of New Zealand, 21(2), 115-139.‏
- Miry, A., & Isazadeh, S. (2023). The Evaluation of the free trade zones effects on provincial value-added using the synthetic control method. Journal of Applied Economics Studies in Iran, 12(46), 207-240. (in persian)
- Monras, J. (2020). Immigration and wage dynamics: Evidence from the Mexican peso crisis. Journal of Political Economy, 128(8), 3017-3089.‏
- Robertson, R. (2003). Exchange rates and relative wages: evidence from Mexico. The North American Journal of Economics and Finance, 14(1), 25-48.‏
- Renani, M., Shirazi, H., & Sadeghi Amroabadi, B. (2014). Determinants of Iran’s emigration flows: An application of the dynamic panel data approach. Journal of Economic Research (Tahghighat- E- Eghtesadi), 49(2), 337-362. (in persian)
- Rezaei, M., & Sadeghi, R. (2021). Migration aspiration of Iranians and Its determinants. Two Quarterly Journal of Contemporary Sociological Research, 10(18), 35-62. (in persian)
- Sadeghi, R., & Seyyed Hosseini, S. M. (2019). Tendency of youth toward international migration and its determinants in Tehran. Strategic Studies on Youth and Sports, 18(43), 9-26. (in persian)
- Serenis, D., & Tsounis, N. (2013). Exchange rate volatility and foreign trade: The case for Cyprus and Croatia. Procedia Economics and Finance, 5, 677-685.‏
- Singer, D. A. (2010). Migrant remittances and exchange rate regimes in the developing world. American Political Science Review, 104(2), 307-323.‏
- Smith, C., & Thoenissen, C. (2019). Skilled migration and business cycle dynamics. Journal of Economic Dynamics and Control, 109, 103-781.‏
- Spielberg, J. M., Miller, G. A., Engels, A. S., Herrington, J. D., Sutton, B. P., Banich, M. T., & Heller, W. (2011). Trait approach and avoidance motivation: lateralized neural activity associated with executive function. NeuroImage, 54(1), 661-670.‏
- Tenreyro, S. (2007). On the trade impact of nominal exchange rate volatility. Journal of Development Economics, 82(2), 485-508.
- Taheri Demneh, M., & Kazemi, M. (2018). The desire to migrate among young iranians; A qualitative study on future images. Interdisciplinary Studies in the Humanities, 10(4), 53-78. (in persian)
- Vogt Isaksen, J. (2019). The impact of the financial crisis on European attitudes toward immigration. Comparative Migration Studies, 7(1), 1-20.‏
- Yang, D. (2008). International migration, remittances and household investment: Evidence from Philippine migrants’ exchange rate shocks. The Economic Journal, 118(528), 591-630.‏