Testing for the Option Value of Migration
Using uncertainty about the future returns to migration, the option value theory of migration can explain low migration rates in spite of huge wage differences. This paper presents the theory in a simple two-period framework and uses ethnic Germans in the CIS to find empirical support for it. Since July 1990, ethnic German immigration from Eastern Europe and the CIS is restricted by means of a protracted application mechanism. In our data on ethnic Germans in Russia and Kazakhstan in the 1990s, we use information on the stage of the application process, migration intentions and ethnicity to construct close proxies for the option value of postponing migration and for migration costs. The link between the two is shown to be as theory predicts.
|Date of creation:||Nov 2001|
|Date of revision:|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harry Coccossis & Peter Nijkamp, 2007. "Regional Science in Perspective," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2007(2), pages 137-140.
- Burda, Michael C. & Härdle, Wolfgang & Müller, Marlene & Werwatz, Axel, 1997.
"Semiparametric analysis of German East-West migration intentions: Facts and theory,"
SFB 373 Discussion Papers
1998,3, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Michael C. Burda & Wolfgang Härdle & Marlene Müller & Axel Werwatz, 1998. "Semiparametric analysis of German East-West migration intentions: facts and theory," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 525-541.
- Burda, Michael C., 1993.
"The determinants of East-West German migration: Some first results,"
European Economic Review,
Elsevier, vol. 37(2-3), pages 452-461, April.
- Burda, Michael C, 1993. "The Determinants of East-West German Migration: Some First Results," CEPR Discussion Papers 764, C.E.P.R. Discussion Papers.
- Locher, Lilo, 2001. "The Determination of a Migration Wave Using Ethnicity and Community Ties," IZA Discussion Papers 346, Institute for the Study of Labor (IZA).
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp405. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.