lecture 3 self-selection and the socio-economic structure of migration

Question 2

how does Chiswick (1999) explain the disproportional high migration rate of indivudals with higher earnings potential?

Answer 2

1. average wages are higher in the destination country
2. out-of-pocket costs for migration
3. realtive wages of high and less-skilled workers remain constant if they migrate -> percentage wage gain of high-skilled workers equals that of less-skilled workers

Question 3

Borjas (1987) challenges the traditional view that immigrants are favorably selected. why?

Answer 3

1) migration costs as a constant proportion of income
2) selection bias of migrant population depends on relative returns to skill –> migrants are drawn from lower tail of talent - and skill distribution of sending countries if income inequality is higher there relative to destination country (and vice versa)

log-normal distribution of earnings

Question 4

Borjas self-selection model. where are migrants drawn from and where do they end up? what are the conditions?

Answer 4

they are drawn from
1) the upper tail if incomes are sufficiently correlated and earnings are more unequal distributed at destination
2) lower tail if income are sufieciently corelated and earnings are more unequal distributed at home
3) lower tail, but end up at upper tail of income distribution at destination if corelation coefficient is small or negative (reverse selection)

Question 5

An important caveat of Borjas model

Vorbehalt/Einschränkung

Answer 5

migration costs are assumed to be a proportional share of income
(if constant as in the Chiswick model) or even decline we end up with a positive self-selection

Question 6

Graph auf Folie 25 wichtig für Klausur

Answer 6

conclusion: If returns to skil are higher in the destination country compared to sending country, then positive ss

Question 7

Empirical evidence

Answer 7

ambiguity of theoretical predictions
- empirical evidence seems to support the Borjas hypothesis partially as higher returns to skill at destination countries increase skill-selection bias towards better-skilled migration
- finding on impact of earnings inequality in sending country seems ambigous

but in the end: results depend heavily on data sources and methods and are still inconclusive. As alsways evidence is not straight forward

Question 8

other interesting empirical findings

Answer 8

distance, skill-selective immigration policies, higher migration costs and free movement of workers seem to have a positive impact on skill-selection

Question 9

in reality the assumptions that migration costs are a constant proportion and that wage increases by the same proportion for all skill groups…

Answer 9

.. are strong and presumably unrealisitic
-> more realistic: wage gains and migration costs vary by skill level and earnings potential (ability) of individuals