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Self?Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

Author

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  • Borjas, George J.

    (Harvard University)

  • Kauppinen, Ilpo

    (VATT, Helsinki)

  • Poutvaara, Panu

    (University of Munich)

Abstract

We show that the Roy model has more precise predictions about the self-selection of migrants than previously realized. The same conditions that have been shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non-migrants. We use the Danish full population administrative data to test the predictions. We find strong evidence of positive self-selection of emigrants in terms of pre-emigration earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non-migrants. This result is not driven by immigration policies in destination countries. Decomposing the self-selection in total earnings into self-selection in observable characteristics and self-selection in unobservable characteristics reveals that unobserved abilities play the dominant role.

Suggested Citation

  • Borjas, George J. & Kauppinen, Ilpo & Poutvaara, Panu, 2015. "Self?Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics," IZA Discussion Papers 9434, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9434
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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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