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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

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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Bibliographic Info

Paper provided by Economics and Econometrics Research Institute (EERI), Brussels 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
Date of revision:
Handle: RePEc:eei:rpaper:eeri_rp_2005_01

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

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References

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  1. Bauer, Thomas K. & Zimmermann, Klaus F., 1999. "Occupational Mobility of Ethnic Migrants," IZA Discussion Papers 58, Institute for the Study of Labor (IZA).
  2. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720.
  3. 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), Brussels.
  4. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November.
  5. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  6. Fertig, Michael & Schmidt, Christoph M., 2001. "First- and Second-Generation Migrants in Germany - What Do We Know and What Do People Think," IZA Discussion Papers 286, Institute for the Study of Labor (IZA).
  7. Phillip B. Levine & David J. Zimmerman, 1995. "An Empirical Analysis of the Welfare Magnet Debate Using the NLSY," NBER Working Papers 5264, National Bureau of Economic Research, Inc.
  8. 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.
  9. Zimmermann, Klaus F, 1993. "Native Wage Impacts of Foreign Labour: A Random Effects Panel Analysis," CEPR Discussion Papers 851, C.E.P.R. Discussion Papers.
  10. Zaka Ratsimalahelo, 2001. "Rank Test Based On Matrix Perturbation Theory," EERI Research Paper Series EERI_RP_2001_04, Economics and Econometrics Research Institute (EERI), Brussels.
  11. Head, Keith & Mayer, Thierry, 2004. "Empirics of Agglomeration and Trade," Open Access publications from Sciences Po info:hdl:2441/10191, Sciences Po.
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Citations

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Cited by:
  1. Ana Paula Martins, 2010. "Splitting Games: Nash Equilibrium and the Optimisation Problem," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 53(1), pages 1-28.
  2. Kancs, D’Artis & Kielyte, Julda, 2010. "Education in the East, Emigrating to the West?," European Review, Cambridge University Press, vol. 18(02), pages 133-154, May.
  3. Anderson, James, 2011. "Migration of Labor in Europe. Theory and Evidence," Working Papers of Institute for Economic Forecasting 110427, Institute for Economic Forecasting.

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