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Dissecting Network Externalities in International Migration

  • Michel BEINE

    ()

    (University of Luxembourg, Luxembourg, and CES-Ifo, Germany)

  • Frédéric DOCQUIER

    ()

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS)

  • Caglar ÖZDEN

    ()

    (World Bank, Development Research Group, United States)

Existing migrant networks play an important role in explaining the size and structure of immigration flows. They affect the net benefits of migration by reducing assimilation costs (’self-selection channel’) and by lowering legal entry barriers through family reunification programs (’immigration policy channel’). This paper presents an identification strategy allowing to disentangle the relative importance of these two channels. Then, it provides an empirical analysis based on US immigration data by metropolitan area and country of origin. First, we show that the overall network externality is strong: the elasticity of migration flows to network size is around one. Second, only a quarter of this elasticity is accounted for by the policy channel. Third, the policy channel was stronger in the 1990s than in the 1980s as the family reunification programs became more effective with growing diasporas. Fourth, the overall diaspora effect and the policy channel are more important for low-skilled migrants.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2011022.

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Length: 20
Date of creation: 16 Jun 2011
Date of revision:
Handle: RePEc:ctl:louvir:2011022
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  1. Santos Silva, J.M.C & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
  2. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
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  5. Michel BEINE & Frederic DOCQUIER & Caglar OZDEN, 2009. "Diasporas," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  13. Frédéric Docquier & B. Lindsay Lowell & Abdeslam Marfouk, 2009. "A Gendered Assessment of Highly Skilled Emigration," Population and Development Review, The Population Council, Inc., vol. 35(2), pages 297-321.
  14. Tenreyro, Silvana, 2007. "On the trade impact of nominal exchange rate volatility," Journal of Development Economics, Elsevier, vol. 82(2), pages 485-508, March.
  15. Mattoo, Aaditya & Neagu, Ileana Cristina & Ozden, Caglar, 2005. "Brain waste? Educated immigrants in the U.S. labor market," Policy Research Working Paper Series 3581, The World Bank.
  16. Winters, Paul C. & de Janvry, Alain & Sadoulet, Elisabeth, 1999. "Family And Community Networks In Mexico-U.S. Migration," Working Papers 12907, University of New England, School of Economics.
  17. Jeffrey Grogger & Gordon H. Hanson, 2008. "Income Maximization and the Selection and Sorting of International Migrants," NBER Working Papers 13821, National Bureau of Economic Research, Inc.
  18. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
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