Despite the lack of clarity in literature with regards to the question
of whether internal in-migration is a desirable phenomenon for the labor
market outcomes, in-migration is often resisted under the premise that it
leads to tighter job markets for the locals. This study therefore attempts
an empirical verification of the impact of in-migration on labour market
outcomes in South Africa. The results of dynamic system GMM regression
analysis indicate that in-migration decreases the labour market participation
rate of the migrant receiving districts, highlighting migration
for non-economic purposes as well as discouraged migrants not seeking
work post-migration. While In-migration is not found to alter signifi-
cantly the employment rate of the receiving areas, indications are that
the employment rate is maintained through an expansion of the informal
wage employment. There is evidence of non-linear relationship between
in-migration and the labour markets of the receiving areas. While initial
migration results in the expansion of the formal sector employment,
sustained increase in in-migration leads to informalisation of the labour
markets. There is hence little evidence of positive self-selection among
internal migrants in South Africa. Our results corroborate the HarrisTodaro
model’s prediction that in-migration leads to increased informal
sector share of the labour marketsю