Determinants and dynamics of migration to OECD countries in a three-dimensional panel framework

This paper investigates the determinants of bilateral immigrant flows to 19 OECD countries between 1998 and 2007 from both advanced and developing origin countries. We pay particular attention to dynamics by including both the lagged migrant flow and the migrant stock to capture partial adjustment and network effects. To correct for the dynamic panel data bias of the fixed effects estimator we use a bootstrap algorithm. Our results indicate that immigrants are primarily attracted by better income opportunities and higher growth rates abroad. Also short-run increases in the host country’s employment rate positively affect migration from both advanced and developing countries. High public services, on the other hand, discourage migration from advanced countries but exert a pull on migration from developing sources, in line with the welfare state hypothesis. Finally, we find evidence for both partial adjustment and the presence of strong network effects. This confirms that both should be considered as crucial elements of the migration model and that a correction for their joint inclusion is required.