Financial constraints, migration and inequality
AbstractAlthough 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 InfoPaper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number 498.
Length: 28p. JEL Code: O15, O16, R23
Date of creation: Feb 2005
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migration; financial constraints; self-selection; human capital;
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