household would not. For example, theory (and common sense) dictates that migration depends on the net benefits from migration. So a variation in migration costs caused by exogenous factors (such as a distance to the border or government policies unrelated to migration potential) can possibly provide good instruments. That is why complementing surveys with other data may improve the analysis.

<u>What instruments have been used? Variables used to instrument for migration vary</u> according to both data availability and the outcome of interest. A variable that might plausibly be a valid instrument when looking at outcomes for migrants abroad may not be suitable as an instrument for looking at outcomes among migrant families remaining in the home country, and vice versa. Some examples of instruments used are: • Distance: McKenzie et. al. (2006) use distance from the New Zealand consulate in Tonga as an instrument for migration when looking at impacts on the migrant in New Zealand. Distance from US border could be used in Mexican migration research, for looking at outcomes in the United States. The argument is that distance correlates with migration probability but not with “earning potential” abroad. However, since distance from the border or from the city is likely to affect outcomes in the home country, these variables would not be suitable as instruments for migration when examining the impact of migration on families in Tonga and Mexico.

• Natural shock: Munshi (2003) uses rainfall in Mexican villages as an instrument for migration, again when looking at outcomes abroad. This would not be an appropriate instrument for looking at outcomes in Mexico, since rainfall shocks could also affect health and income-earning opportunities at home.

• Cultural, historical, community and political factors. Mansuri (2006b) exploits seclusion restrictions on women in Pakistan that require the presence of at least one adult male in the household and includes household composition as a part of her instrument when measuring migration’s impact on child nutrition. Hildebrandt and McKenzie (2005) use historic, 1920s, state-level migration rates in Mexico as an instrument for current migration stocks, arguing that they don’t affect child health outcomes over seventy years later, apart from their influence through current migration. Mansuri (2006b,c), Acosta (2006) or Beaudouin (2005) use migration networks and history (at the village or household level) as instruments for migration (or remittances) postulating that these variables have a positive impact on the opportunity to migrate but no additional impact on income, schooling or nutrition at home. These network variables may be suitable for looking at outcomes in the home country, but can be poor instruments for looking at outcomes abroad, since, for example, a larger migrant network can help migrants abroad earn more. See McKenzie et. al. (2006) for demonstration of how poorly networks perform as an instrument when used for overseas outcomes.

• Economic shocks. Yang and Martinez (2005) and Yang (2006) exploit the “natural experiment” of the 1997 Asian financial crisis to construct an interesting instrument for remittances (not migration). Namely, different rates of depreciation of different currencies introduced an exogenous (migration-independent) variation in the peso value of remittances obtained by Philippine households with migrants in different countries. McKenzie and Rapoport (2006) uses divergence in demand for labor (proxied by 10