Aid and internal migration in Malawi

• We investigate the role of foreign aid as a pull factor for internal migration in Malawi over the period 1998–2008. • We show a positive relationship between the volume of foreign assistance a district receives and the number of immigrants. • The pull factor effect of foreign aid is not only statistically significant, but also economically relevant. • The positive welfare effects of foreign assistance manifest themselves not only through an increase in economic opportunities, but also via improved access to local public services in recipient districts. This paper uses geographically disaggregated data to investigate the role of foreign aid as a pull factor for internal migration in Malawi over the period 1998–2008. Employing a standard gravity model of migration, we show a positive relationship between the volume of foreign assistance a district receives and the number of immigrants. While aid makes districts more attractive as migrant destinations, there is no evidence of a counterbalancing push factor effect on internal mobility. We also dig deeper into the mechanisms through which foreign aid can shape internal migration decisions. According to our results, the positive welfare effects of foreign assistance manifest themselves not only through a rise in economic opportunities, but also in improved access to public services in recipient districts.