Panel Paper: The Role of Agency Reputations in International Labor Migration: Evidence from Sri Lanka

Friday, July 20, 2018
Building 3, Room 207 (ITAM)

*Names in bold indicate Presenter

A. Nilesh Fernando, University of Notre Dame and Niharika Singh, Harvard University

Abuse and contractual breach are persistent features of international migrant labor. This may in part be due to opaque supply chains, multiple intermediaries and a paucity of information for would be migrants. This paper investigates the role of a government program intended to address such asymmetries by creating reputational incentives for local labor intermediaries and publicly revealing their service quality. We matched over 2 million migrant records to foreign intermediaries, local recruitment agencies, and labor complaints registered at over 70 Sri Lankan consulates in the last decade. Using a difference-in-difference design with an eligibility cutoff, we find that agencies which receive a ‘good’ rating are substantially less likely to exit the market and see their revenues double. In contrast, ‘bad’ agencies are more likely to exit and see a dramatic reduction in revenue. Good agencies are able to win higher quality foreign contracts and recruit more vulnerable worker types. High complaint rate agencies that receive a ‘good’ rating appear to differentially benefit. However, we find limited evidence to suggest that the program improved the match quality of migrants.

Full Paper: