| Abstract: |
In this paper, we examine network capital usage and migration patterns in a
theoretical model. Networks are modeled as impacting the migration decision in
many ways. When young, larger networks reduce the time lost moving from one
region to another. In addition networks decrease the time spent searching for
a job. Finally, when old, migrants receive transfer payments through the
network. We show that the number and properties of steady state equilibria as
well as the global dynamics depend crucially on whether the returns to network
capital accumulation exhibit constant, increasing, or decreasing returns to
scales relative to the level of network capital. With constant returns to
scale, migration flows and network capital levels are characterized by either
a unique steady state equilibria or by a two-period cycle. The fluctuations in
network capital usage exhibited by our model are consistent with recent
empirical data regarding the usage of networks by Mexican immigrants. In the
case of increasing returns to scale, either there exists a unique, stable
steady state equilibria or multiple equilibria which are characterized as
either sinks or saddles. When the returns to scale are decreasing, there
exists a unique, stable steady state equilibrium. Finally, we show that
increasing barriers to migration will result in an increase in the flow of
immigrants, contrary to the desired effect, in the constant and increasing
returns to scale cases. |