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Direct Evidence on Risk Attitudes and Migration

  • Jaeger, David A.

    ()

    (CUNY Graduate Center)

  • Bonin, Holger

    ()

    (ZEW Mannheim)

  • Dohmen, Thomas

    ()

    (University of Bonn)

  • Falk, Armin

    ()

    (University of Bonn)

  • Huffman, David B.

    ()

    (University of Oxford)

  • Sunde, Uwe

    ()

    (University of Munich)

Geographic mobility is important for the functioning of labor markets because it brings labor resources to where they can be most efficiently used. It has long been hypothesized that individuals' migration propensities depend on their attitudes towards risk, but the empirical evidence, to the extent that it exists, has been indirect. In this paper, we use newly available data from the German Socio-Economic Panel to measure directly the relationship between migration propensities and attitudes towards risk. We find that individuals who are more willing to take risks are more likely to migrate between labor markets in Germany. This result is robust to stratifying by age, sex, education, national origin, and a variety of other demographic characteristics, as well as to the level of aggregation used to define geographic mobility. The effect is substantial relative to the unconditional migration propensity and compared to the conventional determinants of migration. We also find that being more willing to take risks is more important for the extensive than for the intensive margin of migration.

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File URL: http://ftp.iza.org/dp2655.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2655.

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Length: 32 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published in: Review of Economics and Statistics, 2010, 92(3), 684–689
Handle: RePEc:iza:izadps:dp2655
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  1. Dohmen, Thomas J & Falk, Armin & Huffman, David & Schupp, Jürgen & Sunde, Uwe & Wagner, Gert Georg, 2006. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," CEPR Discussion Papers 5517, C.E.P.R. Discussion Papers.
  2. David A. Jaeger & Holger Bonin & Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2007. "Direct Evidence on Risk Attitudes and Migration," Working Papers 50, Department of Economics, College of William and Mary.
  3. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-96, October.
  4. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
  5. Dohmen, Thomas J & Falk, Armin & Huffman, David & Sunde, Uwe, 2008. "The Intergenerational Transmission of Risk and Trust Attitudes," CEPR Discussion Papers 6844, C.E.P.R. Discussion Papers.
  6. Katz, Eliakim & Stark, Oded, 1986. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 134-49, January.
  7. Francesco Daveri & Riccardo Faini, . "Where do migrants go?," Working Papers 124, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  8. Axel Heitmueller, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," CERT Discussion Papers 0207, Centre for Economic Reform and Transformation, Heriot Watt University.
  9. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
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