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Direct Evidence on Risk Attitudes and Migration

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Author Info

  • David A. Jaeger

    ()
    (College of William and Mary and IZA)

  • Holger Bonin

    (IZA and DIW)

  • Thomas Dohmen

    ()
    (IZA and DIW)

  • Armin Falk

    ()
    (University of Bonn, IZA, CEPR, and DIW)

  • David Huffman

    ()
    (IZA)

  • Uwe Sunde

    ()
    (IZA, University of Bonn, CEPR, and DIW)

Abstract

Geographic mobility is important for the functioning of labor markets because it brings labor resources to where they can be most efficiently used. It has long been hypothesized that individuals' migration propensities depend on their attitudes towards risk, but the empirical evidence, to the extent that it exists, has been indirect. In this paper, we use newly available data from the German Socio-Economic Panel to measure directly the relationship between migration propensities and attitudes towards risk. We find that individuals who are more willing to take risks are more likely to migrate between labor markets in Germany. This result is robust to stratifying by age, sex, education, national origin, and a variety of other demographic characteristics, as well as to the level of aggregation used to define geographic mobility. The effect is substantial relative to the unconditional migration propensity and compared to the conventional determinants of migration. We also find that being more willing to take risks is more important for the extensive than for the intensive margin of migration.

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Bibliographic Info

Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 0703.

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Date of creation: Mar 2007
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Handle: RePEc:crm:wpaper:0703

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Keywords: Migration; attitudes; risk;

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References

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  1. Heitmueller, Axel, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," IZA Discussion Papers 610, Institute for the Study of Labor (IZA).
  2. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
  3. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jurgen Schupp & Gert Wagner, 2005. "Individual risk attitudes: New evidence from a large, representative, experimentally-validated survey," Framed Field Experiments, The Field Experiments Website 00140, The Field Experiments Website.
  4. David A. Jaeger & Holger Bonin & Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2007. "Direct Evidence on Risk Attitudes and Migration," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 0703, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 31(1), pages 191-96, October.
  6. Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe, 2006. "The Intergenerational Transmission of Risk and Trust Attitudes," IZA Discussion Papers 2380, Institute for the Study of Labor (IZA).
  7. Daveri, Francesco & Faini, Riccardo, 1999. "Where Do Migrants Go?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 595-622, October.
  8. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(2), pages 633-687, June.
  9. Katz, Eliakim & Stark, Oded, 1986. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 4(1), pages 134-49, January.
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