Family-sponsored migration (with Sebastian Kupek and Andreas Steinmayr)

Most permanent immigrants to the OECD are family migrants, i.e., a family member who already resides in the destination country sponsors their visa. This paper presents a comprehensive economic analysis of family-sponsored migration. Our analysis builds on unique individual-level administrative data that covers the universe of permanent migrants from the Philippines to the U.S. and allows linking migrants to their sponsors. We aim to make three contributions. First, we present previously unknown stylized facts about family-sponsored migration. The sponsorship rate, the average number of relatives an individual sponsor sponsors directly, is substantially lower than previous estimates based on aggregate data have suggested. In addition, sponsored relatives have relatively high levels of education. Second, we develop a theoretical framework for family-sponsored migration. The key innovation is that it is the sponsor in the destination country, not the potential migrant, who makes the migration decision. We predict sponsoring to (i) increase in the sponsor’s income, (ii) increase in the relative’s (potential) income in the destination country, (iii) decrease in the relative’s (potential) income in the country of origin, and (iv) decrease in the cost of supporting the relative at the destination relative to the origin. Third, we exploit the fine-grained nature of our data and test these predictions. Our empirical evidence largely aligns with the theoretical predictions.