Reforms that keep you at home: The effects of economic transition on migration

Theory asserts that individuals’ migration decisions depend more on their expectations about future income levels than on their current income levels. We find that the implementation of market-oriented reforms in post-communist countries, by forming positive economic prospects, has reduced emigration as predicted by theory. Our estimates show that migration flows are highly responsive to reforms supporting private enterprises and financial services, which provide individuals with strong signals about their future prospects. We show that reforms that improve the management of infrastructure services have no link with migration patterns, which may be an important lesson for government policy.