nep-mig New Economics Papers
on Economics of Human Migration
Issue of 2012‒12‒10
thirteen papers chosen by
Yuji Tamura
Australian National University

  1. How does Economic Integration Change Personal Income Taxation? Evidence from a new Index of Potential Labor Mobility By Protte, Benjamin
  2. Internal Migration and Life Satisfaction: Well-Being Effects of Moving as a Young Adult By Switek, Malgorzata
  3. The Drivers of Diaspora Donations for Development: Evidence from the Philippines By Victoria Licuanan; Toman Omar Mahmoud; Andreas Steinmayr
  4. Split Decisions: Family finance when a policy discontinuity allocates overseas work By Michael Clemens; Erwin Tiongson
  5. Abstract: Illegal Migration, Wages, and Remittances: Semi-Parametric Estimation of Illegality Effects By Christian Schluter; Jackline Wahba
  6. Unobserved Heterogeneity in Multiple-Spell Multiple-States Duration Models By Govert Bijwaard
  7. Kick It Like Özil? - Decomposing the Native-Migrant Education Gap By Annabelle Krause; Ulf Rinne; Simone Schüller
  8. Immigrants, Ethnic Identities and the Nation-State By Constant, Amelie F.; Zimmermann, Klaus F.
  9. English Deficiency and the Native-Immigrant Wage Gap By Miranda, Alfonso; Zhu, Yu
  10. Immigration, jobs and employment protection: evidence from Europe before and during the Great Recession By Francesco D'Amuri; Giovanni Peri
  11. Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity By Assaf Razin; Jackline Wahba
  12. Welfare Migration By Corrado Giulietti; Jackline Wahba
  13. Migrants` Acquisition of Cultural Skills and Selective Immigration Policies By Moritz Bonn

  1. By: Protte, Benjamin
    Abstract: In this paper, I estimate the effect of increasing labor mobility on personal income tax schedules. I combine rich data on effective personal income tax levels in a panel of OECD countries for the period 1986-2005 with a new Index of Potential Labor Mobility. This index allows to tackle issues of reverse causality and potentially confounding effects from strategic competition. Estimates show that increasing labor mobility accounts for a considerable part of lower tax burdens. Furthermore, the reduction is found to be constant across brackets of taxable income.
    Keywords: Personal Income , Taxation , Economic Integration , Labor Mobility
    JEL: H24 F22 J61
    Date: 2012
  2. By: Switek, Malgorzata (University of Southern California)
    Abstract: Migration typically leads to higher income, but its association with life satisfaction remains unclear. Is migration accompanied by an increase in life satisfaction? If it is, is the increase in income responsible or are other life domains driving the satisfaction changes? These two questions are addressed using longitudinal data from a Swedish Young Adult Panel Study for 1999 and 2009. Comparing migrants to non-migrants, it is found that internal migration is accompanied by an increase in life satisfaction. This increase is observed for both, migrants who move due to work and those who move due to non-work reasons. This finding holds regardless of other life transitions that may accompany migration, such as marriage and joining the labor market. However, different factors account for the increase in life satisfaction for work and non-work migrants. For non-work migrants, it is greater housing satisfaction that leads to an improvement in life satisfaction. Moreover, no increase in income relative to non-migrants is found for this group. For work migrants, although their income increases compared with non-migrants, this increase does not seem to explain the differential improvement in life satisfaction because of a lack of improvement in their economic satisfaction (compared to non-migrants). Rather, it is the higher relative status arising from occupational advancement that seems to contribute to the higher life satisfaction for work migrants.
    Keywords: internal migration, life satisfaction, relative status, housing satisfaction
    JEL: J0 J61 O15 R23
    Date: 2012–11
  3. By: Victoria Licuanan; Toman Omar Mahmoud; Andreas Steinmayr
    Abstract: Little is known about the drivers of migrant donations to their home countries. Using data on all donations from Filipino migrants administered by the Philippine Commission on Filipinos Overseas between 1990 and 2010, this paper explores which host and home country factors are associated with migrant donations. On the host country side, we find that donations increase with the level of income earned by the Filipino diaspora and with the number of hate crimes against minorities. On the home country side, we find that donations are not well-targeted. As donations mainly flow to provinces with high rates of emigration, they do not reach the least developed Philippine provinces. However, the diaspora is responsive to natural disasters and channels donations to provinces when they are hit by a typhoon
    Keywords: International migration, philanthropy, collective remittances
    JEL: F22 F24
    Date: 2012–11
  4. By: Michael Clemens (Center for Global Development); Erwin Tiongson (World Bank, AIM, and IZA)
    Abstract: Labor markets are increasingly global. Overseas work can enrich households but also split them geographically, with ambiguous net effects on decisions about work, investment, and education. These net effects, and their mechanisms, are poorly understood. We study a policy discontinuity in the Philippines that resulted in quasi-random assignment of temporary, partial-household migration to high-wage jobs in Korea. This allows unusually reliable measurement of the reduced-form effect of these overseas jobs on migrant households. A purpose-built survey allows nonexperimental tests of different theoretical mechanisms for the reduced-form effect. We also explore how reliably the reduced-form effect could be measured with standard observational estimators. We find large effects on spending, borrowing, and human capital investment, but no effects on saving or entrepreneurship. Remittances appear to overwhelm household splitting as a causal mechanism.
    JEL: J61 O15 R23
    Date: 2012–11
  5. By: Christian Schluter (University of Southampton); Jackline Wahba (University of Southampton and IZA)
    Abstract: We consider the issue of illegal migration from Mexico to the US, and examine whether the lack of legal status causally impacts on outcomes, specifically wages and remitting behavior. These outcomes are of particular interest given the extent of legal and illegal migration, and the resulting financial flows. We formalize this question and highlight the principal empirical problem using a potential outcome framework with endogenous selection. The selection bias is captured by a control function, which is estimated non-parametrically. The framework for remitting is extended to allow for endogenous regressors (e.g. wages). We propose a new reparametrisation of the control function, which is linear in case of a normal error structure, and test linearity. Using Mexican Migration project data, we find considerable and robust illegality effects on wages, the penalty being about 12% in the 1980s and 22% in the 1990s. For the latter period, the selection bias is not created by a normal error structure; wrongly imposing normality overestimates the illegality effect on wages by 50%, while wrongly ignoring selection leads to a 50% underestimate. In contrast to these wage penalties, legal status appears to have mixed effects on remitting behavior.
    Keywords: illegal migration, illegality effects, counterfactuals, selection, control functions, non-parametric estimation, intermediate outcomes, Mexican Migration Project
    JEL: J61 J30 J40
    Date: 2012–11
  6. By: Govert Bijwaard (Netherlands Interdisciplinary Demographic Institute (NIDI))
    Abstract: In survival analysis a large literature using frailty models, or models with unobserved heterogeneity, exist. In the growing literate on multiple spell multiple states duration models, or multistate models, modeling this issue is only at its infant phase. Ignoring unobserved heteogeneity can, however, produce incorrect results. This paper presents how unobserved heterogeneity can be incorporated into multistate models, with an emphasis on semi-Markov multistate models with a mixed proportional hazard structure. First, the aspects of frailty modeling in univariate (proportional hazard, Cox) duration models are addressed and some important models with unobserved heterogeneity are discussed. Second, the domain is extended to modeling of parallel/clustered multivariate duration data with unobserved heterogeneity. The implications of choosing shared or correlated unobserved heterogeneity is highlighted. The relevant differences with recurrent events data is covered next. They include the choice of the time scale and risk set which both have important implications for the way unobserved heterogeneity influence the model. Multistate duration models can have both parallel and recurrent events. Incorporating unobserved heterogeneity in multistate models, therefore, brings all the previously addressed issues together. Although some estimation procedures are covered the emphasis is on conceptual issues. The importance of including unobserved heterogeneity in multistate duration models is illustrated with data on labour market and migration dynamics of recent immigrants to The Netherlands.
    Keywords: multiple spell multiple state duration, mixed proportional hazard, multistate model, unobserved heterogeneity, frailty.
    JEL: C41 J61
    Date: 2012–11
  7. By: Annabelle Krause; Ulf Rinne; Simone Schüller
    Abstract: We investigate second generation migrants and native children at several stages in the German education system to analyze the determinants of the persistent native-migrant gap. One part of the gap can be attributed to differences in socioeconomic background and another part remains unexplained. Faced with this decomposition problem, we apply linear and matching decomposition methods. Accounting for differences in socioeconomic background, we find that migrant pupils are just as likely to receive recommendations for or to enroll at any secondary school type as native children. Comparable natives, in terms of family background, thus face similar difficulties as migrant children. Our results point at more general inequalities in secondary schooling in Germany which are not migrant-specific.
    Keywords: Migration, education, human capital, Germany, tracking
    JEL: J15 J24 I21
    Date: 2012
  8. By: Constant, Amelie F. (George Washington University, Temple University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: In the Western world, multiculturalism has become the way to view and form "nationhood," igniting the interest to understand and model identity. The complexity of identity formation, however, has been firm and ethnic and national identities have been deviating more and more. In this paper, we seek to investigate the nature, role and relationships between ethnic and national identities by using migrants as the natural innovators. The arrival of immigrants can amplify social challenges and both natives and immigrants can see their identities altering and evolving. Individuals in a country can be patriotic, nationalistic, indifferent, apathetic, or subvert and undermining. The openness of the people in the host country, their embracing of new cultures and their respect towards newcomers can play a major role in how immigrants react and how close they remain with the country of origin. The laws of the host country together with the ideals, the self-understanding and the foundation of the sovereign nation can also affect the identities of immigrants and natives at the individual level and at the nation-building level. We present empirical results concerning ethnic and national identities and we discuss the ramifications of the divergence between them. We review surveys and experimental contributions to the study of identity formation and its consequences for economic behavior. Before we conclude we debate the endogeneity issue of identity.
    Keywords: international migration, economic nationalism, colonialism, economics of minorities, ethnic identity, national identity, cultural economics
    JEL: F22 F52 F54 F59 J15 J16 Z10
    Date: 2012–11
  9. By: Miranda, Alfonso (CIDE, Mexico City); Zhu, Yu (University of Kent)
    Abstract: We focus on the effect of English deficiency on the native-immigrant wage gap for male employees in the UK using the first wave of the UK Household Longitudinal Survey. We show that the wage gap is robust to controls for age, region of residence, educational attainment and ethnicity. However, English as Additional Language (EAL) is capable of explaining virtually all the remaining wage gap between natives and immigrants. Using the interaction of language of country of birth and age-at-arrival as instrument, we find strong evidence of a causal effect of EAL on the native-immigrant wage gap.
    Keywords: English as Additional Language (EAL), native-immigrant wage gap, age-at-arrival
    JEL: J15 J61
    Date: 2012–11
  10. By: Francesco D'Amuri (Bank of Italy); Giovanni Peri (UC Davis)
    Abstract: In this paper we analyse the impact of immigrants on the type and quantity of natives’ jobs. We use data on fifteen Western European countries during the 1996-2010 period. We find that immigrants, by taking up manual-routine type of occupations pushed natives towards more “complex” (abstract and communication) jobs. This job upgrade was associated with a 0.7% increase in native wages for a doubling of the immigrants’ share. These results are robust to the use of an IV strategy based on the past settlement of immigrants across European countries. The job upgrade slowed, but did not come to a halt, during the Great Recession. We also document the labour market flows behind it: the complexity of jobs offered to new native hires was greater than that of lost jobs. Finally, we find evidence that the reallocation was larger in countries with more flexible labour laws.
    Keywords: immigration, jobs, task specialization, employment protection laws, Europe
    JEL: J24 J31 J61
    Date: 2012–10
  11. By: Assaf Razin (Tel Aviv University and Cornell University, CEPR, NBER, and CES-ifo); Jackline Wahba (University of Southampton, CPC and IZA.)
    Abstract: This paper revisits the magnet hypothesis and investigates the impact of the welfare generosity on the difference between skilled and unskilled migration rates. The main purpose of the paper is to assess the role of mobility restriction on shaping the effect of the welfare state generosity. In a free migration regime, the impact is expected to be negative on the skill composition of migrants while in a restricted mobility regime, the impact will be the opposite, as voters will prefer selective migration policies, favoring skilled migrants who tend to be net contributors to the fiscal system. We utilize the free labor movement within EUR (the EU, Norway and Switzerland) and the restricted movement from outside of the EUR to compare the free migration regime to the restricted migration regime. We find strong support for the "magnet hypothesis" under the free-migration regime, and the "fiscal burden hypothesis" under the restricted-migration regime even after controlling for differences in educational quality and returns to skills in source and host countries.
    JEL: F0 F2 F22 H10
    Date: 2012–11
  12. By: Corrado Giulietti (IZA - Institute for the Study of Labor); Jackline Wahba (University of Southampton and IZA)
    Abstract: This chapter reviews and discusses major theories and empirical studies about the welfare magnet hypothesis, i.e. whether immigrants are more likely to move to countries with generous welfare systems. Although economic theory predicts that welfare generosity affects the number, composition and location of immigrants, the empirical evidence is rather mixed. We offer possible explanations for the existence of such mixed evidence and highlight that the literature so far has overlooked the presence of different migration regimes, as well as the possibility of reverse causality between welfare spending and immigration.
    Keywords: immigration, welfare spending
    JEL: H53 J61 J68
    Date: 2012–11
  13. By: Moritz Bonn
    Abstract: Based on the requirement of OECD countries to permit substantial inflows of immigrants to compensate for the effects of the demographic change, this paper explores the incentives of heterogeneous migrants to acquire host country specific cultural skills to improve their labor market outcomes. The theoretical results predict that the migrants` ambition in achieving such skills is increased if the scope of their respective cultural group is small, social permeability of migrants in the native society is large and individual integration costs are low. Based on these results, I study whether cultural heterogeneity among the migrant population is welfare enhancing for the native population. I find that as long as migrants do not differ too much with regard to their costs of learning the native culture, cultural heterogeneity is beneficial for the host economy. The model provides an explanation for the shift in the immigration policies of the traditional host countries throughout the twentieth century as well as the current immigration policies in the EU member states.
    Keywords: Immigration, Cultural Interaction, Political Economy
    JEL: F22 J15 O31
    Date: 2012

This nep-mig issue is ©2012 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.
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