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Risk Attitudes and Household Migration Decisions

Author

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  • Christian Dustmann

    (University College London and CReAM)

  • Francesco Fasani

    (Queen Mary University of London, CReAM, CEPR and IZA)

  • Xin Meng

    (Australian National University, CReAM and IZA)

  • Luigi Minale

    (Universidad Carlos III de Madrid, CReAM and IZA)

Abstract

This paper analyses the relation between individual migrations and the risk attitudes of other household members when migration is a household decision. We develop a simple model that implies that which member migrates depends on the distribution of risk attitudes among all household members, and that the risk diversification gain to other household members may induce migrations that would not take place in an individual framework. Using unique data for China on risk attitudes of internal (rural-urban) migrants and the families left behind, we empirically test three key implications of the model: (i) that conditional on migration gains, less risk averse individuals are more likely to migrate; (ii) that within households, the least risk averse individual is more likely to emigrate; and (iii) that across households, the most risk averse households are more likely to send migrants as long as they have at least one family member with sufficiently low risk aversion. Our results not only provide evidence that migration decisions are taken on a household level but also that the distribution of risk attitudes within the household affects whether a migration takes place and who will emigrate.

Suggested Citation

  • Christian Dustmann & Francesco Fasani & Xin Meng & Luigi Minale, 2017. "Risk Attitudes and Household Migration Decisions," Development Working Papers 423, Centro Studi Luca d'Agliano, University of Milano, revised 24 Feb 2017.
  • Handle: RePEc:csl:devewp:423
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    References listed on IDEAS

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    Cited by:

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    2. Kuhnt, Jana, 2019. "Literature review: drivers of migration. Why do people leave their homes? Is there an easy answer? A structured overview of migratory determinants," Discussion Papers 9/2019, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    3. Maurice Schiff, 2017. "Ability drain: size, impact, and comparison with brain drain under alternative immigration policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1337-1354, October.
    4. Bühler, Dorothee & Sharma, Rasadhika & Stein, Wiebke, 2020. "Occupational Attainment and Earnings in Southeast Asia: The Role of Non-cognitive Skills," Labour Economics, Elsevier, vol. 67(C).
    5. Björn NILSSON, 2019. "Education and migration: insights for policymakers," Working Paper 23ca9c54-061a-4d60-967c-f, Agence française de développement.
    6. Akgüç, Mehtap & Liu, Xingfei & Tani, Massimiliano & Zimmermann, Klaus F., 2016. "Risk attitudes and migration," China Economic Review, Elsevier, vol. 37(C), pages 166-176.
    7. van Huizen, Thomas & Alessie, Rob, 2019. "Risk aversion and job mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 91-106.
    8. Kazianga, Harounan & Wahhaj, Zaki, 2020. "Will urban migrants formally insure their rural relatives? Family networks and rainfall index insurance in Burkina Faso," World Development, Elsevier, vol. 128(C).
    9. Géraldine Bocquého & Marc Deschamps & Jenny Helstroffer & Julien Jacob & Majlinda Joxhe, 2018. "Risk and refugee migration," Working Papers hal-02788767, HAL.
    10. Auer, Daniel & Tetlow, Daniel, 2020. "Brexit, collective uncertainty and migration decisions," Discussion Papers, Research Unit: Migration, Integration, Transnationalization SP VI 2020-102, WZB Berlin Social Science Center.
    11. Gibson, John & McKenzie, David & Rohorua, Halahingano & Stillman, Steven, 2019. "The long-term impact of international migration on economic decision-making: Evidence from a migration lottery and lab-in-the-field experiments," Journal of Development Economics, Elsevier, vol. 138(C), pages 99-115.
    12. Bertoli, Simone & Murard, Elie, 2020. "Migration and co-residence choices: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 142(C).
    13. Ondřej Dvouletý & Martin Lukeš & Mihaela Vancea, 2020. "Individual-level and family background determinants of young adults’ unemployment in Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 389-409, May.
    14. Peter Huber & Klaus Nowotny, 2018. "Risk Aversion and the Willingness to Migrate in 30 Countries," WIFO Working Papers 569, WIFO.
    15. Cheng, Zhiming, 2021. "Education and consumption: Evidence from migrants in Chinese cities," Journal of Business Research, Elsevier, vol. 127(C), pages 206-215.
    16. Cai, Shu, 2020. "Migration under liquidity constraints: Evidence from randomized credit access in China," Journal of Development Economics, Elsevier, vol. 142(C).
    17. Wang, Wenlue & Ren, Qian & Yu, Jin, 2018. "Impact of the ecological resettlement program on participating decision and poverty reduction in southern Shaanxi, China," Forest Policy and Economics, Elsevier, vol. 95(C), pages 1-9.
    18. Gibson, John & McKenzie, David & Rohorua, Halahingano & Stillman, Steven, 2020. "Reprint of: The long-term impact of international migration on economic decision-making: Evidence from a migration lottery and lab-in-the-field experiments," Journal of Development Economics, Elsevier, vol. 142(C).
    19. Gröger, André, 2021. "Easy come, easy go? Economic shocks, labor migration and the family left behind," Journal of International Economics, Elsevier, vol. 128(C).
    20. Anna Katharina Raggl, 2019. "Migration intentions in CESEE: sociodemographic profiles of prospective emigrants and their motives for moving," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/19, pages 49-67.

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    More about this item

    Keywords

    : risk aversion; internal migration; household decisions;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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