International migration with capital constraints: interpreting migration from the Netherlands to Canada in the 1920s
An inability to borrow affected migration from Europe to North America. This capital constraint is formalized with a life-cycle model, where agents jointly choose how much to save, the optimal period to finance migration, and whether to migrate. Using a life-cycle model we show that preference for the home country, the period of adjustment after arrival, and the direct cost of migration affect the savings of migrants, age at migration, and who migrates. These results are discussed in light of wages in Canada and the Netherlands, and the characteristics of Dutch immigrants drawn from ship passenger manifests. Capital constraints delayed migration and help explain the large wage gap between the Netherlands and Canada. JEL classification: J61, N32, N34
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Volume (Year): 45 (2012)
Issue (Month): 2 (May)
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