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A Theory Of Migration As A Response To Occupational Stigma

  • C. Simon Fan
  • Oded Stark

Drawing on the literature of occupational status and social distance, a theory is developed of labor migration that is prompted by a desire to avoid “social humiliation.” A closed-economy general equilibrium model that incorporates occupational status and examines the interaction between the goods market and the labor market is constructed. This framework is then extended from a closed, single economy to an open economy setting in a world that consists of two countries or two regions. It is shown that as long as migration can reduce humiliation sufficiently, migration will occur even between two identical economies. Hence, a new model of migration is presented in which migration arises from a wish to reap social exposure gains. The model shows that migration increases the number of individuals who choose to perform degrading jobs and that consequently, migration lowers the price of the good produced in the sector that is associated with low social status. Moreover, the more migration reduces the “humiliation” of performing degrading jobs, the larger the number of individuals who end up choosing such jobs, and the lower the wage in that sector. Finally, a welfare analysis is conducted, comparing the level of wellbeing in an open economy with the level of wellbeing in a closed economy. It is shown that the greater an individual’s aversion to performing degrading jobs, the more likely it is that he will experience a welfare gain when the economy opens up.

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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 52 (2011)
Issue (Month): 2 (05)
Pages: 549-571

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Handle: RePEc:ier:iecrev:v:52:y:2011:i:2:p:549-571
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  1. Stark, Oded & Micevska, Maja & Mycielski, Jerzy, 2009. "Relative poverty as a determinant of migration: Evidence from Poland," Economics Letters, Elsevier, vol. 103(3), pages 119-122, June.
  2. Stark, Oded & Taylor, J. Edward, 1990. "Migration Incentives, Migration Types: The Role Of Relative Deprivation," Working Papers 225854, University of California, Davis, Department of Agricultural and Resource Economics.
  3. Paul Gertler & Manisha Shah & Stefano M. Bertozzi, 2005. "Risky Business: The Market for Unprotected Commercial Sex," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 518-550, June.
  4. Takatoshi Ito, 1997. "Purchasing Power Parity," NBER Books, National Bureau of Economic Research, Inc, number ito_97-2, May.
  5. Stark, Oded & You Qiang Wang, 2002. "A Theory of Self-Segregation as a Response to Relative Deprivation," Royal Economic Society Annual Conference 2002 168, Royal Economic Society.
  6. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  7. Diaz-Serrano, L. & Hartog, J. & Skyt Nielsen, H., 2003. "Compensating Wage Differentials for Schooling Risk in Denmark," Economics, Finance and Accounting Department Working Paper Series n1271003, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  8. Lena Edlund & Evelyn Korn, 2002. "A Theory of Prostitution," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 181-214, February.
  9. Bender, Keith A, 1998. " The Central Government-Private Sector Wage Differential," Journal of Economic Surveys, Wiley Blackwell, vol. 12(2), pages 177-220, April.
  10. Richard J. Butler & John D. Worrall, 2008. "Wage and Injury Response to Shifts in Workplace Liability," ILR Review, Cornell University, ILR School, vol. 61(2), pages 181-200, January.
  11. Stark, Oded & Fan, C. Simon, 2007. "The analytics of seasonal migration," Economics Letters, Elsevier, vol. 94(2), pages 304-312, February.
  12. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
  13. Rosenzweig, Mark R. & Stark, Oded, 1987. "Consumption Smoothing, Migration and Marriage: Evidence from Rural India," Bulletins 7515, University of Minnesota, Economic Development Center.
  14. Gary S. Becker & Kevin M. Murphy & Ivan Werning, 2005. "The Equilibrium Distribution of Income and the Market for Status," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 282-310, April.
  15. Weiss, Y. & Fershtman, C., 1997. "Social Status and Economic Performance: A Survey," Papers 19-97, Tel Aviv.
  16. Stark, Oded & Helmenstein, Christian & Yegorov, Yuri, 1997. "Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration," Economics Series 44, Institute for Advanced Studies.
  17. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-59, July.
  18. Del Bono, Emilia & Weber, Andrea, 2006. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," IZA Discussion Papers 2242, Institute for the Study of Labor (IZA).
  19. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
  20. George A. Akerlof, 2007. "The Missing Motivation in Macroeconomics," American Economic Review, American Economic Association, vol. 97(1), pages 5-36, March.
  21. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
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