A model of migration decisions in social networks

This paper is motivated by rich empirical evidence on the importance of social connections for the decision making of potential migrants. It provides a microfoundation for the well-established hypothesis in the chain migration literature that attributes much of the impact of social contacts to their role as information providers about jobs in the foreign labor market. The proposed theoretical model has two countries, home and destination, and agents in both countries share information about job opportunities via an explicitly modelled network of social relations. The job information affects agents' employment prospects and expected income in each country. These, in turn, determine the decisions of the home country residents on whether to migrate or to stay, which in the model is represented by an outcome of the migration decision game. We study the effects of social networks on equilibrium migration decisions and in particular, the effects of a small change in the number of social contacts in the destination country on the size of the migration ?ow. Using the results of analytical work and numerical simulations, we find that even a marginal increase in the number of links between countries may lead to a substantial increase in migration.