Internal migration and labour markets in Thailand: insights from policy evaluations

This thesis investigates how labour markets respond to a range of national policies in Thailand. It deepens understanding of the behavioural changes of households towards internal migration and of labour market dynamics during the 2000s. It focuses on two policy themes, one on the access to credit and the other on the minimum wage policy. The first essay investigates the relationship between borrowing and internal migration. It evaluates the short and medium term effects of the introduction of a villagebased micro-finance scheme (Village Fund), assessing the impact of borrowing on households' migration decision. Using a panel instrumental variables model, the essay shows that internal migration is not a credit constrained decision in Thailand. Migration interacts with credit over time. While not affecting migration at introduction of the scheme, borrowing is found to reduce the likelihood of migration in the medium term. The second and third essays investigate the effects of the minimum wage policy in Thailand from two complementary angles. The essays provide insights on labour market responsiveness to changes in the minimum wage during the last decade (2002-2013), also focusing on the short term effects of the recent introduction of a National Minimum Wage (2012-2013) which generated an unprecedented hike in the country. The essays evaluate the policy effects on the private sector, focusing on the wage distribution and employment. The second essay evaluates the impact of the minimum wage on the wage distribution. Its novelty is to propose a variant of the Unconditional Quantile Regression, in which the Recentered Inuence Function is applied to the provincial wage distributions. The method allows for the identification of the wage response while accounting for the geographic heterogeneity of Thai wage schedules. It shows that provincial wage distributions are affected by the minimum wage policy up to the 60th percentile, suggesting that minimum wage levels act as a numeraire for wage renegotiation. The evidence further suggest that the 2012-2013 policy change was especially beneficial for workers between the 15th and 45th percentiles. However, the results show no discernible effects of the policy change on the lowest quantiles, suggesting some degree of non-compliance with the law. The third essay explores the employment effects of the minimum wage policy. Using a panel of provincial employment measures, it finds that aggregate private sector employment is not affected by the minimum wage policy. However, the results for 2002-2013 show minor adjustments in youth low-skilled employment, stronger for the female population. The findings also suggest that the latest policy change (2012-2013) had no immediate negative effects on employment.