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Migration Dynamics

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Author Info
Sergio Vergalli (University of Brescia)
Michele Moretto (University of Brescia)

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Abstract

This paper tries to explain why most migration flows show some observable jumps in their processes, a phenomenon that seems to be sympathetic with the characteristic of irreversibility of migration. We present a real option model where the choice to migrate depends on both the differential wage between the host country and the country of origin, and on the probability of being fully integrated into the host country. The theoretical results show that the optimal migration decision of a single individual consists of waiting before migrating in a (coordinate) mass of individuals. The dimension of the migration flow depends on the behavioural characteristics of the ethnic groups: the more "sociable" they are, the larger the size of the wave and the lower the differential wage required. A second part of the paper is devoted to calibrating the model and simulating some migration flows to Italy in the last decade. The calibration is able to replicate the observable migration jumps in the short term. In particular, the calibrated model is able to conjecture the induced labour demand elasticity level of the host country and the behavioural rationale of the migrants.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.108.

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Date of creation: Sep 2005
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Handle: RePEc:fem:femwpa:2005.108

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Related research
Keywords: Migration; Real Option; Labour Market; Network Effect;

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Find related papers by JEL classification:
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ira N. Gang & Thomas Bauer & Gil S. Epstein, 2002. "Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S," Departmental Working Papers 200216, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  2. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October. [Downloadable!] (restricted)
  3. Burda,M.C., 1995. "Migration and the Option Value of Waiting," Papers 597, Stockholm - International Economic Studies.
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  4. Nicola Daniele Coniglio, 2004. "Migropolis: migration networks and formation of ethnic clusters in cities," ERSA conference papers ersa04p146, European Regional Science Association. [Downloadable!]
  5. Joseph G. Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcomes of Natives," NBER Working Papers 3123, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  7. Axel Heitmueller, 2003. "Co-ordination Failures in Network Migration," CERT Discussion Papers 0302, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
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  8. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November. [Downloadable!] (restricted)
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  9. Moretto, Michele, 2000. "Irreversible investment with uncertainty and strategic behavior," Economic Modelling, Elsevier, vol. 17(4), pages 589-617, December. [Downloadable!] (restricted)
  10. Michele Moretto, 2003. "Competition and Irreversible Investments under Uncertainty," Working Papers 2003.32, Fondazione Eni Enrico Mattei. [Downloadable!]
  11. Leahy, John V, 1993. "Investment in Competitive Equilibrium: The Optimality of Myopic Behavior," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 1105-33, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sergio Vergalli, 2006. "Dynamics in Immigration Community," Working Papers ubs0613, University of Brescia, Department of Economics. [Downloadable!]
  2. Michele Moretto & Sergio Vergalli, 2008. "Managing Migration through Quotas: an Option-theory Perspective," Working Papers 0805, University of Brescia, Department of Economics. [Downloadable!]
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