Chapter Study Outline
20.1 The Individual Migration Decision
- The 39 million person U.S. labor force is extremely mobile—between 2007 and 2008, one eighth of U.S. workers moved across state lines.
- A given individual is more likely to migrate as the costs of moving versus staying put decline and the relative benefits of moving versus staying put increase.
- Moving is costly.
- Movers have pecuniary costs, such as the costs that arise in transporting one’s self and one’s possessions to a new location.
- Nonpecuniary costs result from a move away from friends, family, and loved ones and the process of assimilation into the destination region.
- According to the simple model of migration, ceteris paribus, individuals are more likely to migrate
- the greater the amount of time left they have in their career and the larger the wage after moving
- the lower the years it takes to assimilate to the new location, the lower the initial wage, the lower the pecuniary costs of moving, and the lower the interest rate
- Empirical evidence from the last 50 years has provided broad support for the conclusions of the simple model of migration.
- There are some phenomena, such as the fact that immigrants to advanced countries are often drawn from medium-income countries rather than the poorest countries, that are not explained by the simple model of migration.
20.2 Topics: Risk, Repeat and Return Migration, and Tied Moves
- There are circumstances in which an increase in the earnings risk associated with migration can make it more likely that an individual will move.
- The effect of risk on migration is determined largely by worker mobility.
- A worker is completely immobile if he or she is obliged to stay in the new country after migration.
- A worker is completely mobile if he or she can immediately return to the original region and original wage at zero cost.
- Ceteris paribus, earnings risk
- reduces the likelihood of migration if the individual is risk averse and is immobile
- increases the likelihood of migration if the individual is completely mobile
- Under the model of migration as a family decision, the move to a new destination region may be worthwhile even if one member of the family suffers a loss.
- A more complex analysis of migration as a family decision allows for the possibility that family members are willing to live in separate cities provided that the monetary rewards from doing so are suitably high.
- A worker engages in return migration if he or she moves back to the source country after emigrating.
- A worker engages in repeat migration if he or she moves on to some destination other than the source country after immigrating to the destination country.
- Jasso and Rosenzweig (1986) estimated that almost a third of immigrants eventually return home .
- Some explanations for return and repeat migration are
- Workers may be uncertain about the employment prospects in distant labor markets.
- Return migration may be a part of an optimal life-cycle plan that includes moving “home” after sufficient wealth or skills are accumulated in the destination location.
- Learning-by-doing may cause subsequent moves to be easier than the first, which makes them more likely to occur.
20.3 Regional Migration
- The simple migration model treats wages as exogenous but the movement of workers across regions has an effect on wages.
- The equilibrium model of regional migration shows that worker flows tend to equalize the overall value of the job package offered in each region.
- For two regions, A and B, a positive labor-demand shock in region A
- raises the equilibrium wage offered in region A but has no effect on B’s labor market if workers are completely immobile
- raises the equilibrium wages offered in regions A and B and results in migration from B to A if workers are complete mobile between the two regions
- If workers are mobile, the effects of shocks in one region are quickly transmitted to other regions.
20.4 Rural-Urban Migration
- The fundamental transformation occurred in the United States as the share of agricultural employment declined from 40 percent in 1900 to less than 3.4 percent today
- Todaro (1969) and Harris and Todaro (1970) formulated a framework to describe the process of migration between rural and urban areas.
- Individual are spurred to migrate from poor rural areas to urban areas in pursuit of higher wages.
- The flood of new migrants into cities makes it increasingly difficult for these new migrants to find work.
- The flood of new migrants creates unemployment and migrant workers experience a costly transition phase after their move.
- Equilibrium levels of unemployment adjust to keep the volume of migratory flows to the cities in check.
- The migration of workers from rural to urban areas is inefficient due to the congestion externality.
- Under the congestion externality, workers ignore the impact of their migration decisions on the ease with which other urban immigrants can find work when making these migration decisions.
- Society would gain if the number of migrants was limited to a number where all of the migrants where employed.
- Two of the most important real-world migration flows are the Great Migration, in which southern Blacks moved north in the United States, and the ongoing Chinese great migration.