nep-mig New Economics Papers
on Economics of Human Migration
Issue of 2007‒05‒26
nine papers chosen by
Yuji Tamura
Trinity College Dublin

  1. A Land of Milk and Honey with Streets Paved with Gold: Do Emigrants Have Over-Optimistic Expectations about Incomes Abroad? By David McKenzie; John Gibson; Steven Stillman
  2. Entrepreneurship and Survival Dynamics of Immigrants to the U.S. and their Descendants By Dimitris Georgarakos; Konstantinos Tatsiramos
  3. Brain Drain from Turkey: An Investigation of Students’ Return Intentions By Nil Demet Gungor; Aysit Tansel
  4. Skilled Migration, FDI and Human Capital Investment By Daniele Checchi; Gianfranco De Simone; Riccardo Faini
  5. Migration and Elastic Labour in Economic Development: Southeast Asia before World War II By Giovanni Caggiano; Gregg Huff
  6. Labor Market Outcomes, Capital Accumulation, and Return Migration: Evidence from Immigrants in Germany By Murat G. Kirdar
  7. Regional Convergence and The Causal Impact of Migration on Regional Growth Rates By Murat G. Kirdar; D. Sirin Saracoglu
  8. The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach By Razin, Assaf; Sand, Edith
  9. Sin City? By Pieter A. Gautier; Michael Svarer; Coen N. Teulings

  1. By: David McKenzie (World Bank); John Gibson (University of Waikato); Steven Stillman (Motu Economic and Public Policy Research and IZA)
    Abstract: Millions of people emigrate every year in search of better economic and social opportunities. Anecdotal evidence suggests that emigrants may have over-optimistic expectations about the incomes they can earn abroad, resulting in excessive migration pressure, and in disappointment amongst those who do migrate. Yet there is almost no statistical evidence on how accurately these emigrants predict the incomes that they will earn working abroad. In this paper we combine a natural emigration experiment with unique survey data on would-be emigrants' probabilistic expectations about employment and incomes in the migration destination. Our procedure enables us to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. We find a significant underestimation of both unconditional and conditional labor earnings at all points in the distribution. This under-estimation appears driven in part by potential migrants placing too much weight on the negative employment experiences of some migrants, and by inaccurate information flows from extended family, who may be trying to moderate remittance demands by understating incomes.
    Keywords: expectations, migration, natural experiment
    JEL: D84 F22 J61
    Date: 2007–05
  2. By: Dimitris Georgarakos (Goethe University Frankfurt and CFS); Konstantinos Tatsiramos (IZA)
    Abstract: Many studies have explored the determinants of entering into entrepreneurship and the differences in self-employment rates across racial and ethnic groups. However, very little is known about the survival in entrepreneurship of immigrants to the U.S. and their descendants. Employing data from the Survey of Income and Program Participation, we find a lower survival probability in entrepreneurship for Mexican and other Hispanic immigrants, which does not carry on to their U.S.-born descendants. We also find that these two immigrant groups tend to enter entrepreneurship from unemployment or inactivity and they are more likely to exit towards employment in the wage sector, suggesting that entrepreneurship represents for them an intermediate step from non-employment to paid employment.
    Keywords: entrepreneurship, business ownership, duration analysis, left truncation, immigrant status
    JEL: F22 J15 J82 C41
    Date: 2007–05
  3. By: Nil Demet Gungor (Economics Department, Atilim University); Aysit Tansel (Department of Economics, METU)
    Abstract: The emigration of skilled individuals from Turkey attracted greater media attention and the interest of policymakers in Turkey, particularly after the experience of recurrent economic crises that have led to an increase in unemployment among the highly educated young. This study estimates a model of return intentions using a dataset compiled from an Internet survey of Turkish students residing abroad. The findings of this study indicate that, as expected, higher salaries offered in the host country and lifestyle preferences, including a more organized environment in the host country, increase the probability of student non-return. However, the analysis also points to the importance of prior return intentions and the role of the family in the decision to return to Turkey or stay overseas. It is also found that the compulsory service requirement attached to government scholarships increases the probability of student return. Turkish Student Association membership also increases return intentions. Longer stay durations, on the other hand, decrease the probability of return. These findings have important policy implications.
    Keywords: Student non-return, brain drain, return intentions, Turkey
    JEL: F20 F22
    Date: 2007–01
  4. By: Daniele Checchi (University of Milan and IZA); Gianfranco De Simone (University of Milan and Centro Studi Luca d’Agliano); Riccardo Faini (University of Rome Tor Vergata, CEPR and IZA)
    Abstract: It is commonly believed that accumulation of human capital (HC) and availability of physical and financial capitals are among the major determinants of economic growth. In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC might be affected in several ways through migration and capital inflows. Furthermore, endowment of skilled labour and foreign direct investments (FDI) may reinforce each other through possible "complementary effects". Our paper aims to advance the existing empirical literature on the relationship between international factor mobility and domestic accumulation of HC in developing countries. We provide new evidence on how the presence of foreign firms in the domestic economy and the emigration of skilled workers impact the domestic school enrolment. We also investigate whether existing supply of skilled labour is a significant determinant of inward flows of foreign capital. The interdependence between factor mobility and HC accumulation supports some simple back-of-the-envelop calculations aiming to investigate the presence of a virtuous (vicious) circle between HC accumulation and FDI inflows.
    Keywords: human capital investment, factor mobility, FDI, brain drain/gain, complementarity effects, developing countries
    JEL: F22 F23 O15
    Date: 2007–05
  5. By: Giovanni Caggiano; Gregg Huff
    Abstract: Between 1880 and 1939, Burma, Malaya and Thailand received inflows of migrants from India and China comparable in size to European immigration in the New World. This article examines the forces that lay behind this migration to Southeast Asia and asks if experience there bears out Lewis' unlimited labor supply hypothesis. We find that it does and, furthermore, that immigration created a highly integrated labor market stretching from South India to Southeastern China. Emigration from India and China and elastic labor supply are identified as important components of Asian globalization before the Second World War.
  6. By: Murat G. Kirdar (Department of Economics, METU)
    Abstract: In this paper I test the capital accumulation conjecture that is used to rationalize return migration decisions in the context of immigrants in Germany and examine how labor market outcomes influence return migration decisions, with particular attention to selection in these outcomes in return migration. I characterize the level and timing of return migration as well as the selection in it and derive a number of implications of these on the impact of immigrants on the host as well as source countries. Using a rich longitudinal dataset that has an over-sampled group of immigrants (German Socioeconomic Panel), I conduct a Cox proportional hazard analysis with alternative waiting-time concepts. That the sample contains immigrants from four different source countries allows me to utilize the variation in the source country characteristics as well as the time variation in them to identify the parameters of interest. I find evidence for the savings accumulation conjecture, in which return is motivated by higher purchasing power of accumulated savings in the home country. On the other hand, human capital accumulation conjecture is rejected. In the framework of savings accumulation, I examine the impact of an increase in German earnings whose theoretical impact on the return migration decision is ambiguous. In terms of labor market outcomes, both retirement and unemployment emerge as important determinants of return migration choices. Unemployment spell length determines the direction of selection with respect to unemployment in return migration. The data also reveal that the level of return migration is high and varies considerably across the source countries. The hazard function of Turkish immigrants displays a hump-shaped profile that peaks between the ages of 45 and 54 whereas EU immigrants are more likely to return at earlier ages and after retirement.
    Keywords: International Migration; Capital Accumulation; Unemployment; Duration Analysis
    JEL: C41 F22 J61
    Date: 2007–01
  7. By: Murat G. Kirdar (Department of Economics, METU); D. Sirin Saracoglu (Department of Economics, METU)
    Abstract: The standard growth theory predicts that allowing for labor mobility across regions would increase the speed of convergence in per capita income levels and that migration has a negative causal impact on regional growth rates. Although the empirical literature has uncovered some evidence for the former implication, the latter has not been verified empirically. This paper provides empirical evidence for the negative causal impact of migration on provincial growth rates in a developing country with a high level of internal migration that is characterized by unskilled labor exiting rural areas for urban centers. We utilize instrumental variables estimation method with an instrument unique to the country examined and also control for provincial fixed effects.
    Keywords: Regional convergence; Regional growth; Internal migration; Fixed effects; IV estimation
    JEL: O40 R23 C23
    Date: 2007–01
  8. By: Razin, Assaf; Sand, Edith
    Abstract: In the political debate people express the idea that immigrants are good because they can help pay for the old. The paper explores this idea in a dynamic political-economy setup. We characterize sub-game perfect Markov equilibria where immigration policy and pay-as-you-go (PAYG) social security system are jointly determined through a majority voting process. The main feature of the model is that immigrants are desirable for the sustainability of the social security system, because the political system is able to manipulate the ratio of old to young and thereby the coalition which supports future high social security benefits. We demonstrate that the older is the native born population the more likely is that the immigration policy is liberalized; which in turn has a positive effect on the sustainability of the social security system.
    Keywords: demographic stretegic voting; overlapping generations; social security sustainability
    JEL: E1 H3 P1
    Date: 2007–05
  9. By: Pieter A. Gautier (Vrije Universiteit Amsterdam); Michael Svarer (Aarhus University); Coen N. Teulings (Universiteit van Amsterdam)
    Abstract: Is moving to the countryside a credible commitment device for couples? We investigate whether lowering the arrival rate of potential alternative partners by moving to a less populated area lowers the dissolution risk for a sample of Danish couples. We find that of the couples who married in the city, the ones who stay in the city have significant higher divorce rates. Similarly, for the couples who married outside the city, the ones who move to the city are more likely to divorce. This correlation can be explained by both a causal and a sorting effect. We disentangle them by using the timing-of-events approach. In addition we use information on father's location as an instrument. We find that the sorting effect dominates. Moving to the countryside is therefore not a cheap way to prolong relationships.
    Keywords: Dissolution; search; mobility; city
    JEL: J12 J64
    Date: 2007–02–12

This nep-mig issue is ©2007 by Yuji Tamura. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.