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Self-selection in migration and returns to unobservable skills

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Abstract

Several papers have tested the empirical validity of the migration models proposed by Borjas (1987) and Borjas, Bronars, and Trejo (1992). However, to our knowledge, none has been able to disentangle the separate impact of observable and unobservable individual characteristics, and their respective returns across different locations, on an individual's decision to migrate. We build a model in which individuals sort, in part, on potential earnings - where earnings across different locations are a function of both observable and unobservable characteristics. We focus on the inter-provincial migration patterns of Canadian physicians. We choose this particular group for several reasons including the fact that they are paid on a fee-for-service basis. Since wage rates are exogenous, earning differentials are driven by differences in productivity. We then estimate a mixed conditional-logit model to determine the effects of individual and destination-specific characteristics (particularly earnings differentials) on physician location decisions. We find, among other things, that high-productivity physicians (based on unobservables) are more likely to migrate to provinces where the productivity premium is greater, while low-productivity physicians are more likely to migrate to areas where the productivity premium is lower. These results are consistent with a modified Borjas model of self-selection in migration based on both unobservables and observables.

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  • Benoit Dostie & Pierre Thomas Léger, 2006. "Self-selection in migration and returns to unobservable skills," Cahiers de recherche 06-01, HEC Montréal, Institut d'économie appliquée.
  • Handle: RePEc:iea:carech:0601
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    1. Gary L. Hunt & Richard E. Mueller, 2004. "North American Migration: Returns to Skill, Border Effects, and Mobility Costs," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 988-1007, November.
    2. Chris Robinson & Nigel Tomes, 1982. "Self-Selection and Interprovincial Migration in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 15(3), pages 474-502, August.
    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. Dionne, Georges & Langlois, Alain & Lemire, Nicole, 1987. "More on the geographical distribution of physicians," Journal of Health Economics, Elsevier, vol. 6(4), pages 365-374, December.
    5. Satu Nivalainen, 2004. "Determinants of family migration: short moves vs. long moves," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(1), pages 157-175, February.
    6. Antolin, Pablo & Bover, Olympia, 1997. "Regional Migration in Spain: The Effect of Personal Characteristics and of Unemployment, Wage and House Price Differentials Using Pooled Cross-Sections," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 215-235, May.
    7. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
    8. Roger Axelsson & Olle Westerlund, 1998. "A panel study of migration, self-selection and household real income," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(1), pages 113-126.
    9. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-1441, November.
    10. 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.
    11. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, vol. 99(397), pages 739-755, September.
    12. Schlottmann, Alan M & Herzog, Henry W, Jr, 1981. "Employment Status and the Decision to Migrate," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 590-598, November.
    13. Michael Benarroch & Hugh Grant, 2004. "The interprovincial migration of Canadian physicians: does income matter?," Applied Economics, Taylor & Francis Journals, vol. 36(20), pages 2335-2345.
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    Cited by:

    1. Andrés Rodríguez-Pose & Vassilis Tselios, 2010. "Returns to migration, education and externalities in the European Union," Papers in Regional Science, Wiley Blackwell, vol. 89(2), pages 411-434, June.
    2. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers 145, University of Rome La Sapienza, Department of Public Economics.
    3. Terry Gregory & Melanie Arntz & Florian Lehmer, 2011. "Unequal Pay or Unequal Employment? What Drives the Self-Selection of Internal Migrants in Germany?," ERSA conference papers ersa11p972, European Regional Science Association.
    4. Dean R. Lillard & Anna Manzoni, 2012. "International Migration as Occupational Mobility," SOEPpapers on Multidisciplinary Panel Data Research 498, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Andries de Grip & Didier Fouarge & Jan Sauermann, 2010. "What affects international migration of European science and engineering graduates?," Economics of Innovation and New Technology, Taylor & Francis Journals, pages 407-421.
    6. Andrea Cutillo & Claudio Ceccarelli, 2010. "The internal relocation premium: are migrants positively or negatively selected? Evidence from Italy," Working Papers 137, University of Rome La Sapienza, Department of Public Economics.

    More about this item

    Keywords

    Migration; self-selection; earnings; longitudinal data; productivity.;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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