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How does income inequality influence international migration?

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  • Thomas Liebig

    ()

  • Alfonso Sousa-Poza

    ()

Abstract

The increasing importance of highly-skilled migration in times of so-called ?skills shortages? is leading to a growing interest in the determinants and characteristics of highly-skilled migration. However, migration theory with regard to the highly-skilled is not well developed. An important strand of literature that clearly serves for the derivation of empirically testable hypotheses about the determinants of particular types of migrants is self-selection theory. This theory dates back to Roy (1951) and has been adopted by Borjas (1987) for the analysis of the relation between the income distribution and the skills of migrants. He concludes that a relatively more equal income distribution in the host country vis-à-vis the source country leads to a negative self-selection of migrants (i.e. the lowly-skilled will be particularly attracted) and vice versa. Borjas has confirmed this hypothesis with data on immigration to the US. Chiswick (1999) and others, however, have questioned these results. Sample-selection biases may arise in single-country analyses and in all studies based on host-country data, due to the impact of host-country specifics such as migration policy, network migration, and the like. Due to a lack of internationally comparable data, however, international empirical studies with data from the origin countries have not been undertaken to resolve the dispute between Borjas and Chiswick. Furthermore, data on the intentions to emigrate (as opposed to actual migration data) has the distinct advantage of being free from the above-mentioned selection-bias problem. This paper sheds some new light on the self-selection controversy by analysing the relationship between country-specific emigration propensities and each country?s score on the Gini-Index on inequality. The 1995 International Social Survey Programme (ISSP) conducted a survey on national identity, which gathers the necessary data in a rich international microdata set. We run probit-regressions with two samples, one including all surveyed persons and one including only the sub-sample of the highly-skilled. By relying on the Gini index as a proxy for wage inequality, the paper follows Borjas? (1987) approach. Borjas, however, proxies skills differentials by income differentials. Chiswick (1999) argues that these two differentials may only be poorly related. The analysis presented here partly avoids this criticism, as we compare the sub-sample of highly-skilled persons with all surveyed individuals and with the medium- and lowly-skilled. A strong positive correlation between skills and income, as predicted by standard economic theory, therefore suffices for the validity of our approach. The main result of this paper is that, ceteris paribus, a more egalitarian income distribution is associated with lower emigration propensities, while income inequality does not have any impact on the emigration propensities of particularly highly-skilled persons. These results seem to contradict Borjas? prediction that the highly-skilled should be particularly attracted by countries which have relatively high returns to skills. Thus, our analysis is more in line with the arguments put forward by Chiswick (1999) and others.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p472.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p472

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  1. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
  2. Ghatak, Subrata & Levine, Paul & Price, Stephen Wheatley, 1996. " Migration Theories and Evidence: An Assessment," Journal of Economic Surveys, Wiley Blackwell, vol. 10(2), pages 159-98, June.
  3. Michael C. Burda & Wolfgang Härdle & Marlene Müller & Axel Werwatz, 1998. "Semiparametric analysis of German East-West migration intentions: facts and theory," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 525-541.
  4. Guillermina Jasso & Mark R. Rosenzweig & James P. Smith, 2000. "The Changing Skill of New Immigrants to the United States: Recent Trends and Their Determinants," NBER Chapters, in: Issues in the Economics of Immigration, pages 185-226 National Bureau of Economic Research, Inc.
  5. Linda Bell & Richard Freeman, 1994. "Why Do Americans and Germans Work Different Hours?," NBER Working Papers 4808, National Bureau of Economic Research, Inc.
  6. Amelie Constant & Douglas S. Massey, 2003. "Self-selection, earnings, and out-migration: A longitudinal study of immigrants to Germany," Journal of Population Economics, Springer, vol. 16(4), pages 631-653, November.
  7. Borjas, George J, 1990. "Self-Selection and the Earnings of Immigrants: Reply," American Economic Review, American Economic Association, vol. 80(1), pages 305-08, March.
  8. 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.
  9. Shulamit Kahn & Kevin Lang, 1988. "The Effects of Hours Constraints on Labor Supply Estimates," NBER Working Papers 2647, National Bureau of Economic Research, Inc.
  10. Jasso, Guillermina & Rosenzweig, Mark R, 1990. "Self-Selection and the Earnings of Immigrants: Comment," American Economic Review, American Economic Association, vol. 80(1), pages 298-304, March.
  11. Fidrmuc, Jan, 2001. "Migration and adjustment to shocks in transition economies," ZEI Working Papers B 23-2001, ZEI - Center for European Integration Studies, University of Bonn.
  12. Daniel Chiquiar & Gordon H. Hanson, 2005. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 239-281, April.
  13. Paul E. Gabriel & Susanne Schmitz, 1995. "Favorable Self-Selection and the Internal Migration of Young White Males in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 460-471.
  14. repec:wop:humbsf:1998-3 is not listed on IDEAS
  15. Bailey, Adrian J, 1993. "Migration History, Migration Behavior and Selectivity," The Annals of Regional Science, Springer, vol. 27(4), pages 315-26, December.
  16. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  17. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
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Cited by:
  1. Anna Cristina d'Addio & Maria Chiara Cavalleri, 2013. "Labour Mobility and the Portability of Social Rights in the EU," CESifo Working Paper Series 4153, CESifo Group Munich.
  2. Abramitzky, Ran, 2009. "The effect of redistribution on migration: Evidence from the Israeli kibbutz," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 498-511, April.

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