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Can we use NEG models to predict migration flows? An example of CEE accession countries

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d’Artis Kancs

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Abstract

In this paper we develop an analytically solvable and structurally estimable economic geography model and apply it to predict migration flows for the period following the CEE’s integration with the EU. The main innovation of our approach is that it endogenises both explanatory variables and the migration rate. The underlying structural parameters are estimated econometrically using a migration equation, which is derived entirely from the theoretical NEG model. Our simulations show that even relatively moderate changes in some of the explanatory variables (such as transport costs) can actuate unpredictable changes (both in sign and magnitude) in other explanatory variables (such as wages). Keeping these explanatory variables fixed, as in reduced-form models, would produce biased results. Our empirical findings advocate that there is enough evidence to predict a selective migration among the three Baltic States. However, labour mobility in the Baltic countries is sufficiently low to make the swift emergence of a core-periphery pattern very unlikely at this geographical level.

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Paper provided by Economics and Econometrics Research Institute (EERI) in its series EERI Research Paper Series with number EERI_RP_2005_01.

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Length: 35 pages
Date of creation: Jan 2005
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Handle: RePEc:eei:rpaper:eeri_rp_2005_01

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Related research
Keywords: Migration; economic geography; European regions; integration;

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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  1. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720. [Downloadable!] (restricted)
  2. Fertig, Michael & Schmidt, Christoph M, 2001. "First- and Second-Generation Migrants in Germany - What Do We Know and What Do People Think," CEPR Discussion Papers 2803, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Phillip B. Levine & David J. Zimmerman, 1999. "An empirical analysis of the welfare magnet debate using the NLSY," Journal of Population Economics, Springer, vol. 12(3), pages 391-409. [Downloadable!] (restricted)
  4. Zaka Ratsimalahelo, 2001. "Rank Test Based On Matrix Perturbation Theory," EERI Research Paper Series EERI_RP_2001_04, Economics and Econometrics Research Institute (EERI). [Downloadable!]
  5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  6. Krugman, P. & Venables, A.J., 1995. "Globalization and the Inequality of Nations," Research Institute of Industrial Economics Working Papers 430, Research Institute of Industrial Economics (IFN).
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  7. Bauer, Thomas & Zimmermann, Klaus F., 1999. "Occupational Mobility of Ethnic Migrants," IZA Discussion Papers 58, Institute for the Study of Labor (IZA). [Downloadable!]
  8. d’Artis Kancs & Julda Kielyte, 2002. "Migration in the Enlarged European Union: Empirical Evidence for Labour Mobility in the Baltic States," EERI Research Paper Series EERI_RP_2002_04, Economics and Econometrics Research Institute (EERI). [Downloadable!]
  9. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669 Elsevier. [Downloadable!] (restricted)
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  10. De New, John P & Zimmermann, Klaus F, 1994. "Native Wage Impacts of Foreign Labor: A Random Effects Panel Analysis," Journal of Population Economics, Springer, vol. 7(2), pages 177-92.
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