Abstract
The abrupt closure of the Cambodia-Thailand border in 2025 triggered the return of an estimated 820,000 to 950,000 Cambodian migrant workers, a major sudden labour supply shock. This paper develops a new quantitative framework for migration-shock policy analysis, combining Harris-Todaro migration dynamics, a Lewis dual-economy structure, a demand-driven macroeconomic closure, and an empirical returnee identity wedge capturing access frictions relative to domestic workers. The model is calibrated to Cambodia’s 2025 Labour Force Survey, 2022 Economic Census, 2022 Input-Output Table, and 2023 Socio-Economic Survey. Two findings emerge: over 90 per cent of the shock is absorbed into informal employment and non-employment, so the formal share falls even as formal employment rises in absolute terms; and identity-specific frictions shift returnees toward informality relative to domestic workers, with no detectable aggregate employment effect. Each policy lever, from credential recognition to demand-side measures, maps to an explicit model parameter, allowing policymakers to simulate mitigation strategies ex ante or evaluate them ex post.