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Income Maximization and the Selection and Sorting of International Migrants

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  • Jeffrey Grogger
  • Gordon H. Hanson

Abstract

Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more-educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more-educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13821.

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Date of creation: Feb 2008
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Publication status: forthcoming in Grogger, Jeffrey and Gordon H. Hanson. "Income Maximization and the Selection and Sorting of International Migrants." Journal of Development Economics 95, 1 (2011): 42-57.
Handle: RePEc:nbr:nberwo:13821

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