Lecture 1 Flashcards
(13 cards)
Labour intensive countries
Low K/L, low wages and low capital
Capital intensive
High K/L, high wages and high capital
Present value formula
PV = FV/R^YEAR
Net gain to migration (for the individual)
PV New - PV Home - Migration costs
Spouse 1 is a Tied mover if
f ∆PV1( < 0 and ∆PV2) > 0 and ∆PV1( < ∆PV2)
Spouse 1 is a Tied stayer
∆PV1( > 0 and ∆PV2) < 0 and ∆PV1( < ∆PV2)
Classic economic theories reasons for international migration
is caused by income and employment differences across countries and also affected by migration costs
Why do we see so little migration?! Why are income differences across countries still so large?
Migration costs have to be very large for the model to accurately explain the empirical data
What other theories are there?
“new economics of migration” (household/family risk-sharing), social capital or network theory, dual labour market theory, and more
Roy model the decision to migrate depends on
Individual skills - The returns to those skills in the source and destination countries (i.e., how much you gain in wage/earnings form an additional year of education)
Positive selection
If the rate of return to skills is higher in the destination than the source country, the migration flow is positively selected.
Negative selection
If the rate of return to skills is lower in destination than in the source country, the migration flow is negatively selected.
Brain drain and brain gain
If the most skilled individuals leave the country, a “brain-drain” may have negative impacts on the sending country
But if human capital levels are higher in the receiving country and the return rate is sufficiently high, migration may eventually lead to a “brain-gain”
Migrants bring back their original human capital, but also new skills, social connections, and experience acquired in foreign countries
