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.