The informational structure of migration decision and migrants’ self-selection

This paper derives the implications for migrants’ self-selection in unobservables that arise from the introduction of uncertainty in the decision problem that would-be migrants face. We show that if one lifts the assumption introduced in Borjas (1987) that foreign wages are known before the migration decision is taken, then the case for the so-called refugee sorting narrows down considerably, while negative selection becomes a more likely outcome. A greater dispersion of income at destination no longer suffices to predict that immigrants will obtain a higher average income than natives.