Wage Gaps And Migrantion Costs: An Analysis From Simulation Data
Borjas (1987, 1991 and 1994) developed the self-selection theory, applying Royâ€™s model (1951) to migration studies. He establishes that the characteristics of migrants in terms of skills and abilities are driven by wage distribution differences between the host country and home. In this regard, when the country of origin has higher relative returns for skills and more disperse income distribution, a negative selection of migrants is generated, and vice versa. A great deal of literature has studied Self-selection model to analyse how wage distribution influences migrantsâ€™ decisions, leading to consistent and inconsistent results. Given the conflicting results in the literature, this paper examines how migration costs and wage differences influence self-selection patterns â€“i.e. skills in terms of schooling levels. Taking into account that self-selection can not be studied systematically by means of standard data sources because of the lack of data, we propose an analytical model based on the individual investment decision theory (Human Capital theory), applying simulated data by Monte-Carlo method. The theory of individual investment decisions allows us to analyze self-selection patterns across differences in wages and economic conditions at home and in host countries and to introduce uncertainty using a stochastic framework. An empirical application for long-distant migrations â€“from Ecuador to Spainâ€“ is implemented. Our findings show that migrants are positively selected on observable skills between Spain and Ecuador, considering both constant direct migration costs and constant direct migration costs-plus-variable opportunity migration costs. Secondary data from official sources confirm this tendency.
|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.:
- Herbert BrÃ¼cker & Parvati TrÃ¼bswetter, 2007.
"Do the best go west? An analysis of the self-selection of employed East-West migrants in Germany,"
Springer, vol. 34(4), pages 371-395, September.
- Herbert Brücker & Parvati Trübswetter, 2004. "Do the Best Go West?: An Analysis of the Self-Selection of Employed East-West Migrants in Germany," Discussion Papers of DIW Berlin 396, DIW Berlin, German Institute for Economic Research.
- Brücker, Herbert & Trübswetter, Parvati, 2004. "Do the Best Go West? An Analysis of the Self-Selection of Employed East-West Migrants in Germany," IZA Discussion Papers 986, Institute for the Study of Labor (IZA).
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
- George J. Borjas, 2000.
"Foreign-Born Teaching Assistants and the Academic Performance of Undergraduates,"
NBER Working Papers
7635, National Bureau of Economic Research, Inc.
- George J. Borjas, 2000. "Foreign-Born Teaching Assistants and the Academic Performance of Undergraduates," American Economic Review, American Economic Association, vol. 90(2), pages 355-359, May.
- Daniel Chiquiar & Gordon H. Hanson, 2002.
"International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States,"
NBER Working Papers
9242, National Bureau of Economic Research, Inc.
- Daniel Chiquiar & Gordon H. Hanson, 2005. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 239-281, April.
- 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.
- George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
- Edward Funkhouser, 2009. "The Choice of Migration Destination: A Longitudinal Approach using Pre-Migration Outcomes," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 626-640, November.
- Randall K. Q. Akee, 2010.
"Who Leaves and Who Returns? Deciphering Immigrant Self-Selection from a Developing Country,"
- Akee, Randall K. Q., 2007. "Who Leaves and Who Returns? Deciphering Immigrant Self-Selection from a Developing Country," IZA Discussion Papers 3268, Institute for the Study of Labor (IZA).
- Rapoport, Hillel & Docquier, Frederic, 2006.
"The Economics of Migrants' Remittances,"
Handbook on the Economics of Giving, Reciprocity and Altruism,
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p347. 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.