A Gravity Model Analysis of International Migration from Sri Lanka to South-East Asian and European Countries

Since the 1970s, the Middle East region has dominated the foreign employment market of Sri Lanka. However, Sri Lankan migrants have been paying more attention on moving to South-East Asian and European countries as noted in recent decades. In Sri Lanka, there is a substantial lacuna on the macroeconomic studies related to migration although international migration has a significant impact on economic indicators. As a contribution to reduce this gap, this study examines the macroeconomic determinants of international labor migration from Sri Lanka to South-east Asian and European countries using the gravity model of migration. As, in presence of heteroscedasticity, linear estimators result in inconsistency in estimated coefficients unless we use robust standard errors, Poisson Pseudo Maximum Likelihood estimation technique was used to find the determinants using panel data over the period of 2007 to 2015. Destination-year fixed effects were used to capture unobserved time-variant and time-invariant variables as well as to account for the multilateral resistance. Results reveal that GDP per capita and unemployment rate of Sri Lanka are the push factors which force people to move from Sri Lanka while the destination countries’ population and dependency ratio are the pull factors which attract migrants towards the destination. Moreover, the population of Sri Lanka and poverty headcount ratio were also found as significant determinants of international migration.