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Risks and optimal migration duration: The role of higher order risk attitudes

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  • Siwar Khelifa

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Using a bivariate expected utility framework, we develop a two-period model where households determine, in the presence of risks, the parents' migration duration when children are left behind. Our model suggests that the optimal migration duration may respond differently to an increase in a given risk. We provide conditions under which it is optimal for households to decrease the parents' migration duration despite an income risk in the place of origin, and to increase it even though the income in the place of destination is risky. The idea of preference for "harm disaggregation" is used to explain the results. In the absence of uncertainty, we also show the role of the interaction between child human capital and wealth in the household's utility function in determining the optimal migration duration of parents. Empirical implications of this analysis are presented in the last part of the paper.

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  • Siwar Khelifa, 2020. "Risks and optimal migration duration: The role of higher order risk attitudes," Working Papers halshs-02940346, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02940346
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02940346
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    More about this item

    Keywords

    Labor migration; Nth degree Risk; Stochastic dominance; Child human capital; Higher order risk attitudes;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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