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International Migration With Heterogeneous Agents: Theory and Evidence for Germany, 1967–2009

  • Herbert Brücker
  • Philipp J. H. Schröder

Temporary migration, though empirically relevant, is often ignored in formal models. This paper proposes a migration model with heterogeneous agents and persistent cross country income differentials that features temporary migration. In equilibrium there exists a positive relation between the stock of migrants and the income differential, while the net migration flow becomes zero. Consequently, existing empirical migration models, estimating net migration flows, instead of stocks, may be misspecified. This suspicion appears to be confirmed by our investigation of the cointegration relationships of German migration stocks and flows since 1967. We find that (i) panel-unit root tests reject the hypothesis that migration flows and the explanatory variables are integrated of the same order, while migration stocks and the explanatory variables are all I(1) variables, and (ii) the hypothesis of cointegration cannot be rejected for the stock model.

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File URL: http://hdl.handle.net/10.1111/j.1467-9701.2011.01426.x
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Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 35 (2012)
Issue (Month): 2 (02)
Pages: 152-182

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Handle: RePEc:bla:worlde:v:35:y:2012:i:2:p:152-182
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  1. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2004. "Selection or Network Effects? Migration Flows into 27 OECD Countries, 1990-2000," IZA Discussion Papers 1104, Institute for the Study of Labor (IZA).
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  7. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  8. Brücker, Herbert & Siliverstovs, Boriss, 2005. "On the Estimation and Forecasting of International Migration: How Relevant Is Heterogeneity Across Countries?," IZA Discussion Papers 1710, Institute for the Study of Labor (IZA).
  9. Hatton, Timothy J, 1995. "A Model of U.K. Emigration, 1870-1913," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 407-15, August.
  10. Stefano Fachin, 2007. "Long-run trends in internal migrations in italy: a study in panel cointegration with dependent units," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 401-428.
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  14. Epstein, Gil S & Hillman, Arye L., 1998. "Herd Effects and Migration," CEPR Discussion Papers 1811, C.E.P.R. Discussion Papers.
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