Modelling the determinants of trans-Tasman migration after World War II

"This paper identifies the economic and demographic factors responsible for migration flows between Australia and New Zealand by means of a probabilistic model of emigration in both directions. The largely uncontrolled flows between the two countries have the same determinants as those commonly found in studies of internal migration. The cost of migration (proxied by the real cost of air travel), labour market conditions and the potential earnings differential play a role, although the results are modified by the incidence of return migration and age composition."     

Does High‐skilled Migration Affect Publicly Financed Investments?

This paper analyzes the interaction between migration of high‐skilled labor and publicly financed investment. We develop a theoretical model with multiple, ex ante identical jurisdictions where individuals decide on education and subsequent emigration. Migration decisions are based on differences in net income across jurisdictions which may occur endogenously. The interaction between income differences and migration flows gives rise to the potential of multiple equilibria: a symmetric equilibrium without migration and an asymmetric equilibrium in which net income levels differ among jurisdictions and trigger migration flows. In the former equilibrium, all jurisdictions have the same public investment level. In the latter one, public investment is high in host economies of skilled expatriates and low in source economies. We empirically test the hypothesis that emigration rates are negatively associated with publicly financed investment levels for OECD countries.     

Aggregate Fluctuations and International Migration

In this paper, we study the role of short‐run factors such as business cycles or changes in employment rates in explaining international migration flows. First, we derive a model of optimal migration choice predicting that short‐run economic fluctuations trigger migration flows on top of the impact exerted by long‐run factors. Second, we empirically test the magnitude of the effect of these short‐run factors on migration flows. Our results indicate that both aggregate fluctuations and employment rates affect migration flows. Third, we provide evidence that the Schengen Agreement and the euro significantly increased the international mobility of workers between the member countries.uuuü     

Migration of the Talented: Can Europe Catch Up with the U.S.?

We develop a model to analyze migration of highly talented individuals within and into Europe. First, we show that if transferability of human capital is endogenous, i.e., if high migration flows and high human capital transferability are mutually interdependent, Europe might be trapped in a low‐migration equilibrium. Second, we show that high mobility within a Federation is necessary to attract highly talented immigrants into the Federation. We study in how far and in what way the European public policy behind the Bologna and the Lisbon Process can contribute to higher mobility in Europe.     

Migration dynamics

Most migration flows include observable jumps, a phenomenon that is in line with migration irreversibility. We present a real option model where the migration choice depends on both the wage differential between the host country and the country of origin, and on the probability of full integration into the host country. The optimal migration decision of an individual consists of waiting to migrate in a (coordinated) mass of individuals. The size of the migration flow depends on the behavioural characteristics of the ethnic groups: the more “sociable” they are, the larger the wave and the lower the wage differential required. The second part of the paper is devoted to calibrating the model and simulating migration flows into Italy over the last decade. Our calibration can replicate the migration jumps in the short term. In particular, the calibrated model is able to project the induced labour demand elasticity level of the host country and the behavioural rationale of the migrants.     

International migration and trade agreements: The new role of PTAs

This paper provides an empirical analysis of the relationship between preferential trade agreements (PTAs) and bilateral migration flows. Building on the empirical literature on the determinants of migration flows, I estimate a modified gravity model to assess the role of PTAs and their content on bilateral migration flows. Using a sample of 29 OECD destination countries over the period 1998–2008, I show a strong positive effect of PTAs on bilateral migration flows. I find that the content of PTAs also matters: when visa‐and‐asylum and labour market related provisions are included in PTAs, this further stimulates bilateral migration flows. Different estimation strategies, including instrumental variables, are employed to address the potential endogeneity bias problems related to PTAs and their content.     

The determinants of internal migration in a developing country: quantitative evidence for Indonesia, 1930–2000

This study specifies and estimates a gravity model for interprovincial migration in Indonesia. Analysing five cross-sections for Indonesia's 26 provinces for five survey years between 1930 and 2000 we show that throughout the twentieth century economic factors were more important in the explanation of interprovincial migration patterns in Indonesia than planned migration policy aimed at the redistribution of the population. In addition, our regression analysis demonstrates that the urban primacy of Jakarta, Indonesia's capital, had a strong effect on the direction and size of migration flows. Our findings thus suggest that the costly government-supported migration is not very successful and that a strongly centralized government induces migration flows to the capital. These findings have policy implications for other developing countries.     

Costing the Job Compact*

The budgetary cost of any government program should be measured by its impact on the public sector budget balance, over its effective timeframe. Typically, official cost estimates focus on the value of outlays only, and thus create a misleading impression of the opportunity cost of some policy initiatives. This paper offers estimates of the budgetary cost of the Job Compact, using a simple labour force transition flows model of unemployment. Deadweight, displacement and effectiveness impacts are explicitly addressed. We find that, depending on the values chosen for displacement and effectiveness parameters, budgetary cost can be greater or less than outlay estimates. However, for plausible values of these parameters, the budgetary cost is calculated to be substantially lower than official estimates, and may even be negative.     

Geographic labour mobility and the cost of housing: evidence from Italy

In recent years, internal migration in Italy has declined markedly, notwithstanding the widening of the North-South gap in terms of unemployment rates and real income. Here, the extent to which the housing market has contributed to the decline is examined. Preliminary to this analysis, differentials in the cost of housing between the macro-areas of the country are estimated using data on the market price of houses located in 96 provincial capitals. Econometric evidence is provided supporting the view that the North-South housing price differential is a notable factor in explaining the falling pattern of mobility. The positive impact on migration from the South to the North of a wider gap in the two areas in terms of income and employment prospects has been offset by the housing price differential, which has steadily risen at least from the mid-1980s onwards. Yet, a considerable share of the decrease in mobility remains unexplained, possibly owing to the heterogeneity in the composition of migration flows across different cohorts.     

ASSESSING RETURNS TO EDUCATION AND LABOR SHOCKS IN MEXICAN REGIONS AFTER NAFTA

This article examines Mexico's (real) wage movements across its 32 subnational entities for post‐North American Free Trade Agreement years. Employing dynamic panel data methods, we obtain the following results. First, education (or labor productivity) has slightly higher wage effects in the Border‐North region. Second, allowing for foreign capital and labor to respond to wages, returns to education have higher effects in South‐Center Mexico, the region with (average) lower education levels. Third, convergence rates become lower with endogenous foreign capital and migration flows: wages move faster in the South‐Center region than in Border‐North. Overall, migration flows have greater effects on wages than foreign direct investment inflows. (JEL F15, F21, F22, F43, O47)     

Local authority fiscal stance and the pattern of residential migration in the north west of England

The degree of fiscal mobility present in household migration flows between local authority areas in northwestern England is assessed. Following an introduction, the paper is divided into three sections. "The first reviews the methodologies of previous attempts to assess the extent of fiscally induced migration, noting the dominance of American studies, and outlines a choice-theoretic structure within which it is possible to model human migration patterns. Section III considers the problems inherent in modelling migration flows, and Section IV presents results for a Compound Poisson analysis of migration between local authority areas within the four counties of the North West region of England, as well as an assessment of the prevalence of fiscal mobility."     

International migration with capital constraints: interpreting migration from the Netherlands to Canada in the 1920s

Abstract An inability to borrow affected migration from Europe to North America. This capital constraint is formalized with a life‐cycle model, where agents jointly choose how much to save, the optimal period to finance migration, and whether to migrate. Using a life‐cycle model we show that preference for the home country, the period of adjustment after arrival, and the direct cost of migration affect the savings of migrants, age at migration, and who migrates. These results are discussed in light of wages in Canada and the Netherlands, and the characteristics of Dutch immigrants drawn from ship passenger manifests. Capital constraints delayed migration and help explain the large wage gap between the Netherlands and Canada. JEL classification: J61, N32, N34     

LABOUR MOBILITY AND TRANS‐TASMAN CURRENCY UNION*

The prospect of a common currency for Australia and New Zealand has been canvassed by senior poli‐ticians and bureaucrats, and has been the subject of academic debate. According to Mundell (1961 ), a high degree of internal labour mobility is a desirable feature of currency unions. This study looks at the extent to which long‐term migration between Australia and New Zealand responds to output shocks. Estimated VAR models and panel Granger‐causality tests demonstrate that shocks to relative per capita output have a significant and symmetrical impact on migration flows between Australia and New Zealand, and most of the impact is felt after about one year. Separating the shocks to Australia and New Zealand shows that ‘pull’ effects are more important than ‘push’ effects. Additionally, the trajectory of the Australian economy proves particularly influential for the choice of New Zealand emigrants. Although permanent migration responds intuitively to the state of the economy in Australia and New Zealand, the level of these migration flows is low in comparison to Australian inter‐state migration; yet it is high in relation to any third country.     

Selection and network effects—Migration flows into OECD countries 1990-2000

This paper presents empirical evidence on immigration flows into the OECD countries during the period 1990-2000. Our results indicate that network effects are strong, but vary between different groups of welfare states and between countries according to the type of immigration policy being applied. Network effects seem to be less important in the Nordic countries which also seem to attract immigrants from the lowest income level source countries. We do not find clear evidence that selection effects measured by migration flows being sensitive to differences in public social expenditures have had a major influence on the observed migration patterns until now. This may partly be explained by restrictive migration policies which may have dampened the potential selection effects.     

The macroeconomic consequences of migration diversion: Evidence for Germany and the UK

This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU's Eastern Enlargement. The EU has agreed transitional periods for the free movement of workers with the new member states from Central and Eastern Europe. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU. Based on a forecast of the migration potential under the conditions of free movement and of the transitional arrangements, we employ a CGE model with imperfect labour markets to analyse the macroeconomic effects of this diversion process. We find that EU Eastern enlargement has increased in the GDP per capita in the UK substantially, but that the diversion of migration flows towards the UK has reduced wage gains and the decline in unemployment there. The effects of the EU Eastern enlargement are less favourable for Germany, but the diversion of migration flows has protected workers there against a detrimental impact on wages and unemployment.     

Trade,aid and migrations: some basic policy issues

The link between trade policy and international migration is explored using data from the United States and Europe. "We conclude that restrictive trade policies in industrialised countries have most likely added to migration pressures. We then turn to the broader question of the effects of income growth in the sending countries on the propensity to migrate. We argue that, in relatively poor countries, an increase in income will be associated with higher migration flows. For middle income countries, however, income growth will lead to lower migrations. In the medium run, therefore, the relationship between development levels, as measured by GDP per capita, and the propensity to migrate follows an inverse-U pattern. Econometric analysis of aggregate migration flows from Southern Europe provides considerable support for such conjecture."     

Stackelberg thresholds in network routing games or the value of altruism

It is well known that the Nash equilibrium in network routing games can have strictly higher cost than the optimum cost. In Stackelberg routing games, where a fraction of flow is centrally-controlled, a natural problem is to route the centrally-controlled flow such that the overall cost of the resulting equilibrium is minimized.We consider the scenario where the network administrator wants to know the minimum amount of centrally-controlled flow such that the cost of the resulting equilibrium solution is strictly less than the cost of the Nash equilibrium. We call this threshold the Stackelberg threshold and prove that for networks of parallel links with linear latency functions, it is equal to the minimum of the Nash flows on links carrying more optimum flow than Nash flow.Our approach also provides a simpler proof of characterization of the minimum fraction that must be centrally controlled to induce the optimum solution.     

Regional Insurance and Migration

A dynamic model of migration is developed to study whether labor mobility can hedge people against region-specific shocks, making private or public insurance redundant. The model adopts a novel timing for migration, which is argued to be the time frame suitable for analyzing risk-sharing issues. It also innovates on the existing literature by solving individual migration through convexification of the set of actions. The results show that the role of migration as an insurance mechanism is small: labor mobility cannot fully remove income differentials between regions. It is also shown that a fiscal stabilization scheme is, in general, optimal; moreover, any pure risk-sharing mechanism has no influence on migration flows.     

The role of family decision in internal migration: the case of India

This paper analyzes the effects of family decisions and individual decisions on rural-urban migration in India under 2 different rural institutions--family farm and wage labor systems. An analytical framework for explaining family migration decisions reveals that whenever a member of the extended family migrates, he gives up his share in the produce of the family farm. When this happens, the number of adult members on the farm goes down and the total product is affected. 3 case studies of Indian villages are analyzed for this study. 2 empirical relations are examined: 1) if individual migration decisions are predominant, and 2) if family decisions are important in determining the overall flow of migration. Relationships between migration decisions and other variables, such as: 1) number of males in urban areas; 2) urban wages; 3) daily wage rate; 4) average agricultural income; 5) railway distance between rural and urban areas; 6) size of the labor market in destination region; 7) probability that a migrant arriving in an urban area will find a job; and 8) comsumption expenditure, in urban areas estimated by working class consumer price index, are determined. Results show that: 1) the market determined wage variable does not play a very significant role in migration decisions; 2) distance is one of the most important variables in analyzing migration; and 3) the aggregate flow of migration is affected if migration decisions are predominantly family decisions. These findings have relevant policy implications for less developed countries (LDCs), especially because large flows of rural-urban migration in recent years have forced governments to adopt policies for controlling the flows to reduce the burden of unemployment in the urban areas. Government policies affecting rural institutions will have an impact on migration flow; those that lead to a reduction of uncertainty in agriculture will affect average per-capita consumption levels in family farms and hence influence the flow of migration.     

Interactions between internal migration,employment growth,and regional income differences in Spain

In this paper migration movements are analyzed in a general framework to other economic variables. A theoretical model is presented which includes the interactions between internal migration flows, employment and unemployment generation, and regional income distribution. The model is then estimated by simultaneous equations techniques using data on recent Spanish history.