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A Theory Of Migration As A Response To Occupational Stigma

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  • C. Simon Fan
  • Oded Stark

Abstract

Drawing on the literature of occupational status and social distance, a theory is developed of labor migration that is prompted by a desire to avoid “social humiliation.” A closed-economy general equilibrium model that incorporates occupational status and examines the interaction between the goods market and the labor market is constructed. This framework is then extended from a closed, single economy to an open economy setting in a world that consists of two countries or two regions. It is shown that as long as migration can reduce humiliation sufficiently, migration will occur even between two identical economies. Hence, a new model of migration is presented in which migration arises from a wish to reap social exposure gains. The model shows that migration increases the number of individuals who choose to perform degrading jobs and that consequently, migration lowers the price of the good produced in the sector that is associated with low social status. Moreover, the more migration reduces the “humiliation” of performing degrading jobs, the larger the number of individuals who end up choosing such jobs, and the lower the wage in that sector. Finally, a welfare analysis is conducted, comparing the level of wellbeing in an open economy with the level of wellbeing in a closed economy. It is shown that the greater an individual’s aversion to performing degrading jobs, the more likely it is that he will experience a welfare gain when the economy opens up.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 52 (2011)
Issue (Month): 2 (05)
Pages: 549-571

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Handle: RePEc:ier:iecrev:v:52:y:2011:i:2:p:549-571

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References

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  1. Gary S. Becker & Kevin M. Murphy & Ivan Werning, 2005. "The Equilibrium Distribution of Income and the Market for Status," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 282-310, April.
  2. Weiss, Y. & Fershtman, C., 1997. "Social Status and Economic Performance: A Survey," Papers 19-97, Tel Aviv.
  3. Bender, Keith A, 1998. " The Central Government-Private Sector Wage Differential," Journal of Economic Surveys, Wiley Blackwell, vol. 12(2), pages 177-220, April.
  4. repec:ese:iserwp:2006-37 is not listed on IDEAS
  5. Stark, Oded & Helmenstein, Christian & Yegorov, Yuri, 1997. "Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration," Economics Series 44, Institute for Advanced Studies.
  6. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  7. Emilia Del Bono & Andrea Weber, 2008. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," Journal of Labor Economics, University of Chicago Press, vol. 26, pages 181-221.
  8. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-59, July.
  9. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  10. Stark, Oded & Fan, C. Simon, 2007. "The analytics of seasonal migration," Economics Letters, Elsevier, vol. 94(2), pages 304-312, February.
  11. Luis Diaz-Serrano & Joop Hartog & Helena Skyt Nielsen, 2008. "Compensating Wage Differentials for Schooling Risk in Denmark," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 711-731, December.
  12. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
  13. Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-26, August.
  14. Paul Gertler & Manisha Shah & Stefano M. Bertozzi, 2005. "Risky Business: The Market for Unprotected Commercial Sex," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 518-550, June.
  15. George A. Akerlof, 2007. "The Missing Motivation in Macroeconomics," American Economic Review, American Economic Association, vol. 97(1), pages 5-36, March.
  16. Stark, Oded & Taylor, J Edward, 1991. "Migration Incentives, Migration Types: The Role of Relative Deprivation," Economic Journal, Royal Economic Society, vol. 101(408), pages 1163-78, September.
  17. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  18. Takatoshi Ito, 1997. "Purchasing Power Parity," NBER Books, National Bureau of Economic Research, Inc, number ito_97-2, May.
  19. Stark, Oded & You Qiang Wang, 2002. "A Theory of Self-Segregation as a Response to Relative Deprivation," Royal Economic Society Annual Conference 2002 168, Royal Economic Society.
  20. Lena Edlund & Evelyn Korn, 2002. "A Theory of Prostitution," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 181-214, February.
  21. Stark, Oded & Micevska, Maja & Mycielski, Jerzy, 2009. "Relative poverty as a determinant of migration: Evidence from Poland," Economics Letters, Elsevier, vol. 103(3), pages 119-122, June.
  22. Richard J. Butler & John D. Worrall, 2008. "Wage and Injury Response to Shifts in Workplace Liability," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(2), pages 181-200, January.
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Citations

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Cited by:
  1. Stark, Oded, 2013. "Stressful Integration," European Economic Review, Elsevier, vol. 63(C), pages 1-9.
  2. Stark, Oded & Fan, C. Simon, 2011. "Migration for degrading work as an escape from humiliation," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 241-247, March.
  3. Stark, Oded & Hyll, Walter, 2010. "Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy," MPRA Paper 28909, University Library of Munich, Germany.
  4. Stark, Oded & Sorger, Gerhard, 2012. "Income redistribution going awry: The reversal power of the concern for relative deprivation," University of Tuebingen Working Papers in Economics and Finance 47, University of Tuebingen, Faculty of Economics and Social Sciences.
  5. Nina Neubecker, 2013. "Low Occupational Prestige and Internal Migration in Germany," SOEPpapers on Multidisciplinary Panel Data Research 562, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Stark, Oded & Jakubek, Marcin & Falniowski, Fryderyk, 2014. "Reconciling the Rawlsian and the utilitarian approaches to the maximization of social welfare," Economics Letters, Elsevier, vol. 122(3), pages 439-444.
  7. Stark, Oded & Kobus, Martyna & Jakubek, Marcin, 2012. "A concern about low relative income, and the alignment of utilitarianism with egalitarianism," Economics Letters, Elsevier, vol. 114(3), pages 235-238.
  8. Stark, Oded, 2012. "Integration, social distress, and policy formation," Economics Letters, Elsevier, vol. 115(2), pages 318-321.
  9. Dong, Baomin & Fu, Shihe & Gong, Jiong & Fan, Hanwen, 2014. "The Lame Drain," MPRA Paper 53825, University Library of Munich, Germany.
  10. Inga Heiland & Wilhelm Kohler, 2013. "Heterogeneous Workers, Trade, and Migration," CESifo Working Paper Series 4387, CESifo Group Munich.

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