Controlling For Heterogeneity And Asymmetry In Cross-Section Gravity Models Of Aggregate Migration: Evidence From Mexico
The standard gravity model of aggregate migration erroneously assumes homogeneity, quasi-symmetry, and (log) linearity. As a result, estimation of the model using, say, the convenient OLS estimator is plagued by omitted-variables and misspecification biases. This paper, therefore, presents estimates for a cross-section gravity model controlling for unobserved unilateral (origin-/destination-specific) and bilateral (flow-specific) effects. Individual slopes on the bilateral linkage factors have been included to account for potentially correlated heterogeneity in the bilateral dimension that is distinctively related to distance, contiguity, and previous migration (migrant stock), respectively. To implement the model, I use a novel â€šÃ„Ãºthree-wayâ€šÃ„Ã¹ fixed-effects type of Generalized Maximum Entropy estimator (FE-GME). The importance of fixed effects is demonstrated by comparing the FE-GME results with those obtained from OLS. The model is applied for an exploratory analysis of cross-sectional data on inter-state migration in Mexico during the period 1995-2000. It is found that accounting for unobserved heterogeneity in all three dimensions results in appreciably lower magnitudes of all coefficients (except the one on distance!), while most of them retain their statistical significance. Moreover, including bilateral fixed-effects is found to be instrumental in keeping with arbitrary heteroskedasticity, even if the gravity model is specified in its conventional double-log form.
|Date of creation:||Sep 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.ersa.org
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.:
- Ira N. Gang & Thomas Bauer & Gil S. Epstein, 2002.
"Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S,"
Departmental Working Papers
200216, Rutgers University, Department of Economics.
- Bauer, Thomas K. & Epstein, Gil S. & Gang, Ira N., 2002. "Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S," IZA Discussion Papers 551, Institute for the Study of Labor (IZA).
- Bauer, Thomas & Epstein, Gil S & Gang, Ira, 2002. "Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the US," CEPR Discussion Papers 3505, C.E.P.R. Discussion Papers.
- Quirino Paris & Richard E. Howitt, 1998. "An Analysis of Ill-Posed Production Problems Using Maximum Entropy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 124-138.
- Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2004.
"Spatial Wage Disparities: Sorting Matters!,"
CEPR Discussion Papers
4240, C.E.P.R. Discussion Papers.
- Cushing, Brian J, 1986. "Accounting for Spatial Relationships in Models of Interstate Population Migration," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 20(2), pages 66-73, July.
- I-Hui Cheng & Howard J. Wall, 2005.
"Controlling for heterogeneity in gravity models of trade and integration,"
Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
- I-Hui Cheng & Howard J. Wall, 2004. "Controlling for heterogeneity in gravity models of trade and integration," Working Papers 1999-010, Federal Reserve Bank of St. Louis.
- Cole, William E. & Sanders, Richard D., 1983. "Interstate migration in Mexico : Variations on the Todaro theme," Journal of Development Economics, Elsevier, vol. 12(3), pages 341-354, June.
- James Raymer & Andrei Rogers, 2007. "Using age and spatial flow structures in the indirect estimation of migration streams," Demography, Springer;Population Association of America (PAA), vol. 44(2), pages 199-223, May.
- Amos Golan & Esfandiar Maasoumi, 2008. "Information Theoretic and Entropy Methods: An Overview," Econometric Reviews, Taylor & Francis Journals, vol. 27(4-6), pages 317-328.
- Peter Mueser, 1989. "Measuring the impact of locational characteristics on migration: Interpreting cross-sectional analyses," Demography, Springer;Population Association of America (PAA), vol. 26(3), pages 499-513, August.
- Laurent Calvet & Etienne Comon, 2003.
"Behavioral Heterogeneity and the Income Effect,"
The Review of Economics and Statistics,
MIT Press, vol. 85(3), pages 653-669, August.
- Laurent E. Calvet & Etienne Comon, 2000. "Behavioral Heterogeneity and The Income Effect," Harvard Institute of Economic Research Working Papers 1892, Harvard - Institute of Economic Research.
- Laurent-Emmanuel Calvet & Etienne Comon, 2003. "Behavioral Heterogeneity and the Income Effect," Post-Print hal-00478345, HAL.
- Jeremiah M. Allen & B. Curtis Eaton, 2005. "Incomplete Information and Migration: the Grass is Greener Across the Higher Fence," Journal of Regional Science, Wiley Blackwell, vol. 45(1), pages 1-19.
- Shen, Edward Z. & Perloff, Jeffrey M., 2001. "Maximum entropy and Bayesian approaches to the ratio problem," Journal of Econometrics, Elsevier, vol. 104(2), pages 289-313, September.
- Richard C. Jones, 2001. "Maquiladoras and U.S.-Bound Migration in Central Mexico," Growth and Change, Wiley Blackwell, vol. 32(2), pages 193-216.
- P. A. V. B. Swamy & George S. Tavlas, 1993.
"Random coefficient models: theory and applications,"
Finance and Economics Discussion Series
93-14, Board of Governors of the Federal Reserve System (U.S.).
- Swamy, P A V B & Tavlas, George S, 1995. " Random Coefficient Models: Theory and Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 165-96, June.
- Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr., 2005.
"Remittances, Inequality and Poverty: Evidence from Rural Mexico,"
2005 Annual meeting, July 24-27, Providence, RI
19245, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005. "Remittances, Inequality and Poverty: Evidence from Rural Mexico," Working Papers 60287, University of California, Davis, Department of Agricultural and Resource Economics.
- Boucher, Steve & Stark, Oded & Taylor, J. Edward, 2005. "A Gain with a Drain? Evidence from Rural Mexico on the New Economics of the Brain Drain," Working Papers 190907, University of California, Davis, Department of Agricultural and Resource Economics.
- Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers 1488, Iowa State University, Department of Economics.
- J. Ulyses Balderas & Michael Greenwood, 2010. "From Europe to the Americas: a comparative panel-data analysis of migration to Argentina, Brazil, and the United States, 1870–1910," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1301-1318, September.
- Golan, Amos, 2007. "Information and entropy econometrics - volume overview and synthesis," Journal of Econometrics, Elsevier, vol. 138(2), pages 379-387, June.
- Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053, June.
- Michael Greenwood & Jerry Ladman & Barry Siegel, 1981. "Long-Term Trends In Migratory Behavior In A Developing Country: The Case of Mexico," Demography, Springer;Population Association of America (PAA), vol. 18(3), pages 369-388, August.
- Schwartz, Aba, 1973. "Interpreting the Effect of Distance on Migration," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1153-69, Sept.-Oct.
- Warin Thierry & Blakely Andrew, 2012.
"Choice or Mimetism in the Decision to Migrate? A European Illustration,"
Global Economy Journal,
De Gruyter, vol. 12(2), pages 1-32, June.
- Thierry Warin & Andrew Blakely, 2009. "Choice or Mimetism in the Decision to Migrate? A European Illustration," CIRANO Working Papers 2009s-38, CIRANO.
- Peter Egger, 2005. "Alternative Techniques for Estimation of Cross-Section Gravity Models," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 881-891, November.
- Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
- Scott L. Baier & Jeffrey H. Bergstrand, 2005.
"Do free trade agreements actually increase members’ international trade?,"
FRB Atlanta Working Paper
2005-03, Federal Reserve Bank of Atlanta.
- Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
- Bruder, Jana, 2003. "East-West Migration in Europe, 2004 - 2015," Thuenen-Series of Applied Economic Theory 40, University of Rostock, Institute of Economics.
- Shioji, Etsuro, 2001. "Composition Effect of Migration and Regional Growth in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 15(1), pages 29-49, March.
- Dunlevy, James A, 1993. "Migrant Stock vs. Lagged Migrant Flow as a Determinant of Migrant Settlement: A Comment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(2), pages 181-88, May.
- Dunlevy, James A & Gemery, Henry A, 1977. "The Role of Migrant Stock and Lagged Migration in the Settlement Patterns of Nineteenth Century Immigrants," The Review of Economics and Statistics, MIT Press, vol. 59(2), pages 137-44, May.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa10p329. 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: (Gunther Maier)
If references are entirely missing, you can add them using this form.