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Dissecting Network Externalities in International Migration

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  • Michel Beine
  • Frédéric Docquier
  • Caglar Özden

Abstract

Existing migrant networks play an important role in explaining the size and structure of immigration flows. They affect the net benefits of migration for future migrants by lowering assimilation costs (‘self-selection’ channel) and increase the probability of potential migrants to obtain a visa through family reunification programs (‘immigration policy’ channel). This paper presents an identification strategy allowing to disentangle these two channels. Then, it provides an empirical illustration based on US immigration data by metropolitan area and country of origin. First, we show that the overall network externality is strong: the elasticity of migration flows to network size is around one. Second, only a quarter of this elasticity is accounted for by the policy channel. Third, the policy channel was stronger in the nineties than in the eighties due to more generous family reunion program. Fourth, the global elasticity and the policy contribution are much greater for low-skilled migrants.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3333.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3333

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Related research

Keywords: migration; network/diaspora externalities; immigration policy;

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References

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  1. Mattoo, Aaditya & Neagu, Ileana Cristina & Özden, Çaglar, 2008. "Brain waste? Educated immigrants in the US labor market," Journal of Development Economics, Elsevier, vol. 87(2), pages 255-269, October.
  2. McKenzie, David & Rapoport, Hillel, 2007. "Self-selection patterns in Mexico-U.S. migration : the role of migration networks," Policy Research Working Paper Series 4118, The World Bank.
  3. Guillermina Jasso & Mark Rosenzweig, 1986. "Family reunification and the immigration multiplier: U.S. immigration law, origin-country conditions, and the reproduction of immigrants," Demography, Springer, vol. 23(3), pages 291-311, August.
  4. Bauer, Thomas K. & Epstein, Gil S. & Gang, Ira N., 2002. "Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S," IZA Discussion Papers 551, Institute for the Study of Labor (IZA).
  5. Joao Santos Silva & Silvana Tenreyro, 2005. "The log of gravity," LSE Research Online Documents on Economics 3744, London School of Economics and Political Science, LSE Library.
  6. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
  7. David Card, 2009. "Immigration and Inequality," American Economic Review, American Economic Association, vol. 99(2), pages 1-21, May.
  8. Winters, Paul C. & de Janvry, Alain & Sadoulet, Elisabeth, 1999. "Family And Community Networks In Mexico-U.S. Migration," Working Papers 12907, University of New England, School of Economics.
  9. Frédéric Docquier & B. Lindsay Lowell & Abdeslam Marfouk, 2009. "A Gendered Assessment of Highly Skilled Emigration," Population and Development Review, The Population Council, Inc., vol. 35(2), pages 297-321.
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  13. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2004. "Selection or Network Effects? Migration Flows into 27 OECD Countries, 1990-2000," IZA Discussion Papers 1104, Institute for the Study of Labor (IZA).
  14. Silvana Tenreyro, 2003. "On the trade impact of nominal exchange rate volatility," Working Papers 03-2, Federal Reserve Bank of Boston.
  15. Michel BEINE & Frederic DOCQUIER & Caglar OZDEN, 2009. "Diasporas," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  16. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
  17. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
  18. Gang, Ira N & Rivera-Batiz, Francisco L, 1994. "Labor Market Effects of Immigration in the United States and Europe: Substitution vs. Complementarity," Journal of Population Economics, Springer, vol. 7(2), pages 157-75.
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Cited by:
  1. Neubecker, Nina & Smolka, Marcel, 2013. "Co-national and cross-national pulls in international migration to Spain," International Review of Economics & Finance, Elsevier, vol. 28(C), pages 51-61.

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