Estimating the Effects of Macroeconomic Factors on Net Migration: A 2sls Approach in Panel Data

Abstract This paper investigates the effects of macroeconomic and institutional factors on net international migration across countries with different levels of socioeconomic development. Its main objective is to estimate the causal influence of unemployment, GDP per capita, income inequality, and political stability on migration balance dynamics. Unlike most studies, which focus on either migration inflows or outflows, this paper uses the net migration indicator, interpreted as the overall balance of migration processes. The empirical analysis is based on panel data for ten countries covering the period 1990–2023, obtained from the World Bank database. To account for persistent cross-country heterogeneity and the potential endogeneity of macroeconomic variables, the study employs a panel data model with country fixed effects and a two-stage least squares (2SLS) estimation approach. The results show that political stability and income inequality are statistically significant determinants of net migration, indicating that institutional predictability and distributional characteristics play an important role in shaping migration balances. GDP per capita demonstrates a negative and statistically significant relationship with net migration, which is consistent with the modern interpretation of the nonlinear and ambiguous development–migration relationship within the migration transition framework. In contrast, unemployment does not exhibit a statistically robust effect once endogeneity is addressed. These findings highlight the importance of institutional and structural factors over short-term labour market fluctuations in explaining migration balance. Overall, the study contributes to the empirical literature by identifying macroeconomic and institutional determinants that retain explanatory power for net migration dynamics.