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Herd Effects and Migration

Author

Listed:
  • Epstein, Gil S
  • Hillman, Arye L.

Abstract

In this paper we introduce the notion of herd effects or information cascades into models of migration-related phenomena. We consider individuals making sequential decisions regarding emigration. Each individual receives a signal which conveys private information regarding preferred locations abroad, and also observes the decisions made by previous emigrants. The herd behaviour which ensues gives rise to geographical concentration in host countries of immigrants from the one location. We show how herd effects can be expected to have both efficiency and political-economy consequences. We expect international factor allocation predicated on herd effects to be inefficient. Herd effects can also be the source of social tensions when the host country’s resident population is xenophobic. In general, herd effects can lead to incorrect personal location decisions, since people are led to discount their private information. We also compare herd effects with the network-externalities explanation of immigrant concentration.

Suggested Citation

  • Epstein, Gil S & Hillman, Arye L., 1998. "Herd Effects and Migration," CEPR Discussion Papers 1811, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1811
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    Cited by:

    1. Docquier, Frederic & Rapoport, Hillel, 2004. "Skilled migration: the perspective of developing countries," Policy Research Working Paper Series 3382, The World Bank.
    2. Schiff, Maurice, 2002. "Love thy neighbor: trade, migration, and social capital," European Journal of Political Economy, Elsevier, vol. 18(1), pages 87-107, March.
    3. Herbert Brücker & Philipp J. H. Schröder, 2012. "International Migration With Heterogeneous Agents: Theory and Evidence for Germany, 1967–2009," The World Economy, Wiley Blackwell, vol. 35(2), pages 152-182, February.

    More about this item

    Keywords

    clustering; Herd Behaviour; Migration; Network Externalities;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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