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Financial constraints, migration and inequality

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  • Juliano Junqueira Assunção

    ()
    (Department of Economics PUC-Rio)

  • Leandro S. Carvalho

    (Department of Economics Princeton University)

Abstract

Although the self-selection of emigrants is determined by di¤erences in the returns to education, according to the celebrated Roy model, empirical evidence suggests that migrants tend to be favorably selected. This paper argues that financial con- straints might be useful to explain this controversy. These constraints might impose positive correlations between (i) wealth and education, and (ii) wealth and migra- tion, implying a positive bias in the empirical results. We also show that high levels of migration premium and return to education in the source country explain the migration of middle-class individuals, a situation in which migration increases in- equality in the home country.

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Bibliographic Info

Paper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number 498.

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Length: 28p. JEL Code: O15, O16, R23
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:rio:texdis:498

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Keywords: migration; financial constraints; self-selection; human capital;

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  1. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
  2. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
  3. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September.
  4. Barry R. Chiswick, 1999. "Are Immigrants Favorably Self-Selected? An Economic Analysis," University of Chicago - George G. Stigler Center for Study of Economy and State 147, Chicago - Center for Study of Economy and State.
  5. David Mckenzie & Hillel Rapoport, 2004. "Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico," Working Papers 2004-3, Department of Economics, Bar-Ilan University.
  6. Freeman, Richard B., 1993. "Immigration from poor to wealthy countries : Experience of the United States," European Economic Review, Elsevier, vol. 37(2-3), pages 443-451, April.
  7. Locher, Lilo, 2004. "Immigration from the former Soviet Union to Israel: Who is coming when?," European Economic Review, Elsevier, vol. 48(6), pages 1243-1255, December.
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