Labour Migration as a Response to Relative Deprivation
In this paper we define the relative deprivation of a person with income y as an increasing function of the percentage of individuals in the person's reference group whose income is larger than y. We obtain his satisfaction by adding up the marginal utilities of income over the range of income a person possesses. We model migration from one reference group to another as a response to relative deprivation and satisfaction: We say that a strong incentive to migrate exists if relative deprivation decreases while satisfaction rises with migration and that a weak incentive exists if the individual increases or decreases his satisfaction and deprivation at the same time by migrating. We derive conditions under which different incentives, weak or strong, hold for different individuals. We obtain the result that in general the richest individual in a society will not have a strong incentive to migrate but may have a weak incentive to migrate, whereas the poorest individual may have a strong incentive to migrate and also a weak incentive to migrate. Our analysis enables us to explain several perplexing migratory phenomena, identify income inequality as a distinct explanatory variable of migration and establish an incentive to migrate in situations where the utility-social welfare approach does not.
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- Yitzhaki, Shlomo, 1982. "Relative deprivation and economic welfare," European Economic Review, Elsevier, vol. 17(1), pages 99-113.
- Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
- Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 321-24, May.
- Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-71, September.
- Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-28, October.
- Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
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