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Migration, Family, and Risk Diversification

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Author Info

  • Kong-Pin Chen

    (Academia Sinica and National Taiwan University, Taiwan)

  • Shin-Hwang Chiang

    (York University, Canada)

  • Siu-Fai Leung

    (Hong Kong University of Science And Technology, Hong Kong)

Abstract

This paper proposes a formal model of migration in which workers are heterogeneous and markets are stochastically correlated. We derive and characterize the optimal migration pattern of a family. It is shown to depend on differences in expected earnings, costs of migration, income risks, and more importantly market correlations. We show that migration can take place even when migrants earn less abroad and, more surprisingly, when earnings in the foreign country are riskier for every member of the family. Moreover, it may well be an optimal arrangement to have only dependents migrate, thus rationalizing the recent dependent-oriented migration flows from places like Hong Kong and Taiwan. We also provide some evidence in support of our theory.

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File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/migr3.pdf
File Function: First version, 2002
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Bibliographic Info

Paper provided by York University, Department of Economics in its series Working Papers with number 2002_01.

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Length: 39 pages
Date of creation: Jan 2002
Date of revision:
Handle: RePEc:yca:wpaper:2002_01

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Keywords: Migration; Emigration; Family; Risk Diversification; Dependents;

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References

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  1. Francesco Daveri & Riccardo Faini, . "Where do migrants go?," Working Papers 124, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  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. Katz, Eliakim & Stark, Oded, 1986. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 134-49, January.
  4. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-96, October.
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Citations

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Cited by:
  1. Helena Skyt Nielsen & Michael Svarer, 2006. "Educational Homogamy: Preferences or Opportunities?," CAM Working Papers 2006-12, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  2. Pylypchuk, Yuriy, 2009. "Effects of immigration on the health insurance status of natives," Journal of Health Economics, Elsevier, vol. 28(5), pages 1028-1037, September.
  3. Ahsan, S. Quamrul, 2007. "Temporary Migration, Labour Supply and Welfare," Working Papers in Economics 01/07, University of Bergen, Department of Economics.
  4. Richter, Susan M., 2008. "The Insurance Role of Remittances on Household Credit Demand," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6261, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Tarbalouti, Essaid, 2008. "Investissement, protectionnisme et décision de migration internationale
    [Investment, protectionism and decision of international migration]
    ," MPRA Paper 56310, University Library of Munich, Germany.
  6. Maurice Kugler, . "Migrant Remittances, Human Capital Formation and Job Creation Externalities in Colombia," Borradores de Economia 370, Banco de la Republica de Colombia.
  7. Xavier Chojnicki & Ainura Uzagalieva, 2008. "Labor Migration from East to West in the Context of European Integration and Changing Socio-political Borders," CASE Network Studies and Analyses 0366, CASE-Center for Social and Economic Research.
  8. Michael Clemens and Timothy N. Ogden, 2014. "Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development- Working Paper 354," Working Papers 354, Center for Global Development.

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