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Crossing the Border: Self-selection, Earnings and Individual Migration Decisions

  • Simone Bertoli

    ()

    (Institute for Employment Research)

  • Jesus Fernandez-Huertas Moraga

    ()

    (Institute for Economic Analysis, CSIC)

  • Francesc Ortega

    ()

    (Universitat Pompeu Fabra)

Many empirical studies on the determinants of international migration flows rely exclusively on macro data, and do not account for migrants' self-selection. We analyze a very interesting episode in international migration for which we are able to gather individual-level data covering all relevant countries, namely the exodus of Ecuadorians to Spain and the US in the aftermath of the economic collapse of 1999. Specifically, we produce selectioncorrected predictions of counterfactual individual earnings and use them to estimate a discrete-choice migration equation that allows for correlated errors across destinations and a rich structure of migration costs. We find that earnings significantly shape individual migration decisions, even in an episode in which Ecuadorians mostly chose Spain where earnings were lower than in the US, and they contribute to explaining the observed composition of migration flows. Moreover, our estimates show that changes in earnings at a particular destination have a larger effect on destination choice conditional on migration than on the scale of migration.

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Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 1011.

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Date of creation: May 2010
Handle: RePEc:crm:wpaper:1011
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