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Self-Selection in Migration and Returns to Unobservable Skills

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  • Dostie, Benoit

    ()
    (HEC Montreal)

  • Léger, Pierre Thomas

    ()
    (HEC Montreal)

Abstract

Several papers have tested the empirical validity of the migration models proposed by Borjas (1987) and Borjas, Bronars, and Trejo (1992). However, to our knowledge, none has been able to disentangle the separate impact of observable and unobservable individual characteristics, and their respective returns across different locations, on an individual's decision to migrate. We build a model in which individuals sort, in part, on potential earnings - where earnings across different locations are a function of both observable and unobservable characteristics. We focus on the inter-provincial migration patterns of Canadian physicians. We choose this particular group for several reasons including the fact that they are paid on a fee-for-service basis. Since wage rates are exogenous, earning differentials are driven by differences in productivity. We then estimate a mixed conditional-logit model to determine the effects of individual and destination-specific characteristics (particularly earnings differentials) on physician location decisions. We find, among other things, that high-productivity physicians (based on unobservables) are more likely to migrate to provinces where the productivity premium is greater, while low-productivity physicians are more likely to migrate to areas where the productivity premium is lower. These results are consistent with a modified Borjas model of self-selection in migration based on both unobservables and observables.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1942.

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Length: 30 pages
Date of creation: Jan 2006
Date of revision:
Publication status: published in: Journal of Population Economics, 2009, 22(4), 1005-1024
Handle: RePEc:iza:izadps:dp1942

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Keywords: productivity; migration; longitudinal data; earnings; self-selection;

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References

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  1. George J. Borjas & Stephen G. Bronars & Stephen J. Trejo, 1992. "Self-Selection and Internal Migration in the United States," NBER Working Papers 4002, National Bureau of Economic Research, Inc.
  2. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, Econometric Society, vol. 58(6), pages 1411-41, November.
  3. Daniel Chiquiar & Gordon H. Hanson, 2002. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," NBER Working Papers 9242, National Bureau of Economic Research, Inc.
  4. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 739-55, September.
  5. Gary L. Hunt & Richard E. Mueller, 2004. "North American Migration: Returns to Skill, Border Effects, and Mobility Costs," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 988-1007, November.
  6. Antolin, Pablo & Bover, Olympia, 1997. "Regional Migration in Spain: The Effect of Personal Characteristics and of Unemployment, Wage and House Price Differentials Using Pooled Cross-Sections," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 59(2), pages 215-35, May.
  7. Roger Axelsson & Olle Westerlund, 1998. "A panel study of migration, self-selection and household real income," Journal of Population Economics, Springer, Springer, vol. 11(1), pages 113-126.
  8. Dionne, Georges & Langlois, Alain & Lemire, Nicole, 1987. "More on the geographical distribution of physicians," Journal of Health Economics, Elsevier, Elsevier, vol. 6(4), pages 365-374, December.
  9. Michael Benarroch & Hugh Grant, 2004. "The interprovincial migration of Canadian physicians: does income matter?," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(20), pages 2335-2345.
  10. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, American Economic Association, vol. 77(4), pages 531-53, September.
  11. Satu Nivalainen, 2004. "Determinants of family migration: short moves vs. long moves," Journal of Population Economics, Springer, Springer, vol. 17(1), pages 157-175, February.
  12. Chris Robinson & Nigel Tomes, 1982. "Self-Selection and Interprovincial Migration in Canada," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 15(3), pages 474-502, August.
  13. Schlottmann, Alan M & Herzog, Henry W, Jr, 1981. "Employment Status and the Decision to Migrate," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 590-98, November.
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Cited by:
  1. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers, University of Rome La Sapienza, Department of Public Economics 145, University of Rome La Sapienza, Department of Public Economics.
  2. Andrés Rodríguez-Pose & Vassilis Tselios, 2009. "Returns to migration, education, and externalities in the European Union," Working Papers, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales 2009-15, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales, revised 09 Feb 2010.
  3. Andries de Grip & Didier Fouarge & Jan Sauermann, 2010. "What affects international migration of European science and engineering graduates?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(5), pages 407-421.
  4. Terry Gregory & Melanie Arntz & Florian Lehmer, 2011. "Unequal Pay or Unequal Employment? What Drives the Self-Selection of Internal Migrants in Germany?," ERSA conference papers ersa11p972, European Regional Science Association.
  5. Dean R. Lillard & Anna Manzoni, 2012. "International Migration as Occupational Mobility," SOEPpapers on Multidisciplinary Panel Data Research 498, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Andrea Cutillo & Claudio Ceccarelli, 2010. "The internal relocation premium: are migrants positively or negatively selected? Evidence from Italy," Working Papers, University of Rome La Sapienza, Department of Public Economics 137, University of Rome La Sapienza, Department of Public Economics.

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