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

  • Eric Gould

    ()

    (Hebrew University, Shalem Center, CEPR, and IZA)

  • Omer Moav

    ()

    (Hebrew University, Royal Holloway University of London, Shalem Center, and CEPR)

This paper examines the effect of inequality on the incentives to emigrate according to a person's education and unobservable skills (residual wage). 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. Using a unique data set on Israeli emigrants, we show that the probability of emigrating indeed increases monotonically with education. However, the relationship between residual wages and emigration rates exhibits an inverse u-shaped pattern. We build a model to explain both of these patterns by incorporating the idea that education is a "general" skill which can be transferred to a foreign country, but residual wages are composed of "general" and "country-specific skills" which are not easily transferable. We test the model's predictions by exploiting variation in the patterns of emigration across industries and occupations. Our findings are consistent with the theory, and therefore, highlight the importance of differentiating between general and "country-specific" skills in order to understand emigrant selection.

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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 1014.

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Date of creation: Jun 2010
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Handle: RePEc:crm:wpaper:1014
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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. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, January.
  3. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
  4. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
  5. Gordon Dahl, 1997. "Mobility and the Returns to Education: Testing A Roy Model With Multiple Markets," Working Papers 760, Princeton University, Department of Economics, Industrial Relations Section..
  6. 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.
  7. David McKenzie & Hillel Rapoport, 2007. "Self-selection patterns in Mexico-U.S. migration: The role of migration networks," CReAM Discussion Paper Series 0701, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  8. Pia Orrenius & Madeline Zavodny, 2000. "Self-selection among undocumented immigrants from Mexico," Working Papers 0005, Federal Reserve Bank of Dallas.
  9. 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.
  10. Belot, Michèle & Hatton, Timothy J., 2008. "Immigrant Selection in The OECD," CEPR Discussion Papers 6675, C.E.P.R. Discussion Papers.
  11. Pablo Ibarraran & Darren Lubotsky, 2005. "Mexican Immigration and Self-Selection: New Evidence from the 2000 Mexican Census," NBER Working Papers 11456, National Bureau of Economic Research, Inc.
  12. 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.
  13. 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.
  14. repec:dgr:kubcen:19958 is not listed on IDEAS
  15. Ben-David, Dan, 2008. "Brain Drained: A Tale of Two Countries," CEPR Discussion Papers 6717, C.E.P.R. Discussion Papers.
  16. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," Discussion Papers 07-048, Stanford Institute for Economic Policy Research.
  17. 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.
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