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When is "Too Much" Inequality Not Enough? The Selection of Israeli Emigrants

  • Gould, Eric D
  • Moav, Omer

This paper examines the effect of inequality on the incentives to emigrate according to a person’s observable and unobservable skills. Borjas (1987) shows that higher skilled individuals are more likely to emigrate than lower skilled individuals when the returns to skill are higher in a potential foreign destination. Building on this framework, we develop a model which shows that this prediction holds for observable skills like education which are "general" in the sense of being easily transferable to another country. However, we show that the relationship between unobservable skills and the probability of emigrating is an inverse U-shape - since unobservable skills are a mixture of "general skills" and "country-specific skills" which are not easily transferable. We examine the predictions of our model with a unique data set containing information on who emigrates from Israel between 1995 and 2004, combined with a full set of demographic and labor market variables for both movers and stayers in 1995. By exploiting differences between Israel and the United States in the returns to observable (education) and unobservable skills across different sectors (industries and occupations), we find strong evidence that a lower return to unobservable skills in Israel versus the US entices higher ability Israelis to leave the country. Also, we find that virtually the entire positive relationship between education and the rate of emigration would be eliminated if the returns to education were increased in Israel to US levels within each industry. Overall, the results strongly support our model and the importance of differentiating between general and "country-specific" skills in the analysis of immigrant selection.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6955.

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Date of creation: Sep 2008
Date of revision:
Handle: RePEc:cpr:ceprdp:6955
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  1. Cobb-Clark, Deborah A, 1993. "Immigrant Selectivity and Wages: The Evidence for Women," American Economic Review, American Economic Association, vol. 83(4), pages 986-93, September.
  2. David McKenzie & Hillel Rapoport, 2010. "Self-Selection Patterns in Mexico-U.S. Migration: The Role of Migration Networks," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 811-821, November.
  3. Pia M. Orrenius & Madeline Zavodny, 2001. "Self-selection among undocumented immigrants from Mexico," FRB Atlanta Working Paper No. 2001-1, Federal Reserve Bank of Atlanta.
  4. Pablo Ibarraran & Darren Lubotsky, 2007. "Mexican Immigration and Self-Selection: New Evidence from the 2000 Mexican Census," NBER Chapters, in: Mexican Immigration to the United States, pages 159-192 National Bureau of Economic Research, Inc.
  5. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," RCER Working Papers 488, University of Rochester - Center for Economic Research (RCER).
  6. Daniel Chiquiar & Gordon H. Hanson, 2005. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 239-281, April.
  7. Randall Akee, 2010. "Who Leaves? Deciphering Immigrant Self-Selection from a Developing Country," Economic Development and Cultural Change, University of Chicago Press, vol. 58(2), pages 323-344, 01.
  8. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
  9. George J. Borjas & Stephen G. Bronars & Stephen J. Trejo, 1992. "Self-Selection and Internal Migration in the United States," NBER Working Papers 4002, National Bureau of Economic Research, Inc.
  10. Ben-David, Dan, 2008. "Brain Drained: A Tale of Two Countries," CEPR Discussion Papers 6717, C.E.P.R. Discussion Papers.
  11. Michèle V. K. Belot & Timothy J. Hatton, 2012. "Immigrant Selection in the OECD," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1105-1128, December.
  12. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," Discussion Papers 07-048, Stanford Institute for Economic Policy Research.
  13. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, July.
  14. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  15. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," The Quarterly Journal of Economics, MIT Press, vol. 123(3), pages 1111-1159, August.
  16. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
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