FACTORS INFLUENCING FACTORS INFLUENCING MIGRATION FLOWSMIGRATION FLOWS

PhD defencePhD defence

Mariola PytlikovaMariola Pytlikova

Aarhus, February 20th, 2006Aarhus, February 20th, 2006

Department of Economics, Aarhus School of BusinessDepartment of Economics, Aarhus School of Business

2 phenomena driving 2 phenomena driving migration flows over the last migration flows over the last decades:decades:

1. 1. Growing migration from Growing migration from less developed countriesless developed countries

lower social mobility, skill transferability and lower social mobility, skill transferability and skill acquisitionskill acquisition

immigrants have difficulties entering the destinations’ labor markets and integrate

2 phenomena driving 2 phenomena driving migration flows over the last migration flows over the last decades:decades: 2. 2. Fall of Iron Curtain – emigration from Fall of Iron Curtain – emigration from Central and Central and

Eastern EuropeEastern Europe

Given geographical and cultural proximity and the large economic differences, Western Europe fear mass migration,

EU enlargement towards the East:• 10 new countries joined EU15 in May 2004,• UK, Ireland and Sweden have opened, majority of “old” members imposes restrictions to free movement of workers,• In 2006 decision about extending the ”transition period”

Migration pressures will Migration pressures will continue in the futurecontinue in the future

Growing globalization – improvements in Growing globalization – improvements in communication, Internet, transportations communication, Internet, transportations

Demographic projectionsDemographic projections

Demographic projections – Demographic projections – European UnionEuropean Union

0-45-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+

60 6040 4020 200

Males Females

2000(Population: 451.4 million)

2050 (Population: 401 million)

Source: Cohen (2003): Human Population: The Next Half Century

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

60 6040 4020 200

Males Females

Demographic projections – Demographic projections – North Africa and West AsiaNorth Africa and West Asia

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

60 6040 4020 200

Males Females

Source: Cohen (2003): Human Population: The Next Half Century

2000(Population: 587.3 million)

2050 (Population: 1,298 million)

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

60 6040 4020 200

Males Females

Migration pressures will Migration pressures will continue in the futurecontinue in the future

Growing globalization – improvements in Growing globalization – improvements in communication, Internet, transportations communication, Internet, transportations

Demographic projectionsDemographic projections

DETERMINANTS OF MIGRATION FLOWS IMPORTANT DETERMINANTS OF MIGRATION FLOWS IMPORTANT FROM THE POLICY MAKERS POINT OF VIEW.FROM THE POLICY MAKERS POINT OF VIEW.

Immigration policy must adjust to the migration Immigration policy must adjust to the migration pressures and to the aging populations.pressures and to the aging populations.

WHY DO PEOPLE WHY DO PEOPLE MIGRATE? Theory IMIGRATE? Theory I

ECONOMIC FACTORS:ECONOMIC FACTORS:

Wage differences Wage differences (Hicks, 1932),(Hicks, 1932),

““Human capital investment” Human capital investment” (Sjaastad, 1962; Becker, (Sjaastad, 1962; Becker, 1964), 1964),

Income expectations conditioned on being employed (Harris Income expectations conditioned on being employed (Harris & Todaro, 1970; Hatton, 1995), & Todaro, 1970; Hatton, 1995),

Family or households decision Family or households decision (Mincer, 1978; Holmlund, (Mincer, 1978; Holmlund, 1984),1984),

Risk-diversifying strategy of families Risk-diversifying strategy of families (Stark, 1991),(Stark, 1991),

Relative deprivation approachRelative deprivation approach (Stark, 1984),(Stark, 1984),

““Welfare magnet” Welfare magnet” (Borjas, 1999).(Borjas, 1999).

WHY DO PEOPLE MIGRATE? WHY DO PEOPLE MIGRATE? Theory IITheory II

MIGRATION NETWORKS:MIGRATION NETWORKS:

– migration networks: migration networks: “…sets of interpersonal ties that connect “…sets of interpersonal ties that connect migrants, former migrants, and non-migrants in origin and migrants, former migrants, and non-migrants in origin and destination areas through ties of kinship, friendship, and shared destination areas through ties of kinship, friendship, and shared community origin” (Massey, 1993)community origin” (Massey, 1993)

– help to explain persistence in migrationhelp to explain persistence in migration

– ““herd behavior” effect herd behavior” effect (Bauer et al. 2002),(Bauer et al. 2002),

NON-ECONOMIC FACTORSNON-ECONOMIC FACTORS: war, love/marriage, taste : war, love/marriage, taste for adventurefor adventure

OTHER (UN)OBSERVABLE COUNTRY SPECIFIC FACTORSOTHER (UN)OBSERVABLE COUNTRY SPECIFIC FACTORS

WHY DO PEOPLE NOT WHY DO PEOPLE NOT MIGRATE? TheoryMIGRATE? Theory

But only around 2 percent of the world’s population resided in a But only around 2 percent of the world’s population resided in a country other than they were born.country other than they were born.

?????? WHY THERE IS NOT THAT MUCH MIGRATION ???WHY THERE IS NOT THAT MUCH MIGRATION ???

BARRIERS TO MIGRATION:BARRIERS TO MIGRATION: Immigration policiesImmigration policies

Costs of migrationCosts of migration

Cultural distanceCultural distance

Language barriersLanguage barriers

out-of-pocket expenses

psychological costs

WHO MIGRATES??WHO MIGRATES??

SELECTION PROCESSES IN MIGRATIONSELECTION PROCESSES IN MIGRATION

““self-selection model” self-selection model” (Borjas, 1987) - (Borjas, 1987) - skill differentials skill differentials

between immigrants and natives in relation to the variance between immigrants and natives in relation to the variance

in the wage distribution.in the wage distribution.

In line with theIn line with the “Human capital investment” “Human capital investment” there are there are

higher “returns to migration” for young with greater abilitieshigher “returns to migration” for young with greater abilities

(Chiswick, 2000).(Chiswick, 2000).

Positive Positive selectionselection

Negative selectionNegative selection

countries with big wage dispersion countries with low wage dispersion

WHAT DOES THE EMPIRICAL WHAT DOES THE EMPIRICAL EVIDENCE SAY???EVIDENCE SAY???

There are many studies on determinants of international There are many studies on determinants of international migration – but mostly on migration into one country;migration – but mostly on migration into one country;

Evidence from a multi-country perspective has been in Evidence from a multi-country perspective has been in general rather scarce, mostly due to the data limitations;general rather scarce, mostly due to the data limitations;

Previous studies on migration from Central and Eastern Previous studies on migration from Central and Eastern Europe relied on out-of-sample data analysis, again due to Europe relied on out-of-sample data analysis, again due to the data limitations.the data limitations.

DATASETDATASET

Given the lack of international migration databases - this new dataset serves a great source for analyses of international migration behavior.

It is difficult to obtain a consistent database on international migration

Contact statistical offices in the 26 OECD countries

Detailed information on immigration flows and stock into 26 OECD countries from 129 particular countries of origin.

Period: 1989 to 2000.

Dataset unbalanced, i.e. missing observations for some countries and some years

DATASETDATASET

Sources: WB, ILO, OECD, IMF and national statistical offices of particular OECD countries.

Besides - many other variables, which can help us explain the immigration behavior:

Economic variablesDemographic variables,Distance variables: cultural, physical, linguistic,Welfare state variables,Educational variables,Violated political rights and civil liberties variable

METHODOLOGYMETHODOLOGY

Regression analysisRegression analysis

CHALLENGES:CHALLENGES: SOLUTION:SOLUTION:

1 2Gross flowsijt ijtX

Explanatory variablesExplanatory variables

How to tackle unobserved How to tackle unobserved country-specific heterogeneity ?country-specific heterogeneity ?

Panel data models - Fixed or Panel data models - Fixed or Random effects estimatorsRandom effects estimators

Economic DynamicsEconomic DynamicsInstrumental variable techniquesInstrumental variable techniquesArellano-Bond (1991) difference or the Arellano-Bond (1991) difference or the Arellano-Bover (1995) system GMM Arellano-Bover (1995) system GMM estimatorestimator

ij Unobserved heterogeneityUnobserved heterogeneity

ijt Remaining errorRemaining error

MIGRATION DETERMINANTS: MIGRATION DETERMINANTS: Aspects considered in my thesisAspects considered in my thesis

Chapter 2:Chapter 2: How mobile are Central and Eastern Europeans? How mobile are Central and Eastern Europeans?

Evidence from inter-regional migration in the Czech RepublicEvidence from inter-regional migration in the Czech Republic

Chapter 3:Chapter 3: Selection and network effects – migration flows Selection and network effects – migration flows

into OECD countries 1990-2000. into OECD countries 1990-2000. (Joint with Peder J. Pedersen (Joint with Peder J. Pedersen

and Nina Smithand Nina Smith))

Chapter 4: Chapter 4: Where did Central and Eastern Emigrants go and Where did Central and Eastern Emigrants go and

why? why?

Chapter 5: Chapter 5: EU enlargement: migration from new EU EU enlargement: migration from new EU

countries. countries.

MIGRATION DETERMINANTS: MIGRATION DETERMINANTS: Aspects considered in my thesisAspects considered in my thesis

Chapter 2:Chapter 2: How mobile are Central and Eastern Europeans? How mobile are Central and Eastern Europeans?

Evidence from inter-regional migration in the Czech RepublicEvidence from inter-regional migration in the Czech Republic

Chapter 3:Chapter 3: Selection and network effects – migration flows Selection and network effects – migration flows

into OECD countries 1990-2000. into OECD countries 1990-2000. (Joint with Peder J. Pedersen (Joint with Peder J. Pedersen

and Nina Smithand Nina Smith))

Chapter 4: Chapter 4: Where did Central and Eastern Emigrants go and Where did Central and Eastern Emigrants go and

why? why?

Chapter 5: Chapter 5: EU enlargement: migration from new EU EU enlargement: migration from new EU

countries. countries.

MIGRATION DETERMINANTS: MIGRATION DETERMINANTS: Aspects considered in my thesisAspects considered in my thesis

Chapter 2:Chapter 2: How mobile are Central and Eastern Europeans? How mobile are Central and Eastern Europeans?

Evidence from inter-regional migration in the Czech RepublicEvidence from inter-regional migration in the Czech Republic

Chapter 3:Chapter 3: Selection and network effects – migration flows Selection and network effects – migration flows

into OECD countries 1990-2000. into OECD countries 1990-2000. (Joint with Peder J. Pedersen (Joint with Peder J. Pedersen

and Nina Smithand Nina Smith))

Chapter 4: Chapter 4: Where did Central and Eastern Emigrants go and Where did Central and Eastern Emigrants go and

why? why?

Chapter 5: Chapter 5: EU enlargement: migration from new EU EU enlargement: migration from new EU

countries. countries.

FACTORS INFLUENCING FACTORS INFLUENCING MIGRATION FLOWS – findings MIGRATION FLOWS – findings IIEFFECT ON GROSS EFFECT ON GROSS MIGRATION MIGRATION FLOWS:FLOWS:

THEORY:THEORY: FINDINGS:FINDINGS:

Economic factors:Economic factors:

Income Income destinationdestination

Income sourceIncome source

Income ratioIncome ratio

Unemployment Unemployment destinationdestination

Unemployment Unemployment sourcesource

Welfare magnetWelfare magnet

++

--

++

--

++

Inverted U-shapeInverted U-shape

++

Chapter 3, Chapter 3, Faini and Faini and Venturini,1994Venturini,1994

--

-- or no effect/ or no effect/ insignificantinsignificant

++ ++ Chapters 2, 4 and 5Chapters 2, 4 and 5

Chapters 2,3, 4 and 5Chapters 2,3, 4 and 5

Chapters 2,3, 4 and 5Chapters 2,3, 4 and 5

Chapter 3Chapter 3

-- or no effect/ or no effect/ insignificantinsignificant

Chapter 3Chapter 3

FACTORS INFLUENCING FACTORS INFLUENCING MIGRATION FLOWS – findings MIGRATION FLOWS – findings IIIIEFFECT ON GROSS EFFECT ON GROSS MIGRATION FLOWS:MIGRATION FLOWS:

THEORY:THEORY: FINDINGS:FINDINGS:

NETWORKSNETWORKS

Other factors – human capital:Other factors – human capital:

Tertiary enrollment Tertiary enrollment rate sourcerate source

Illiteracy rate sourceIlliteracy rate source

Language in Language in destinationsdestinations

Non-economic factorsNon-economic factors

Freedom House Freedom House IndexIndex

Other unobservable Other unobservable country-spec. effectscountry-spec. effects

++

--

++

++

Chapter 3Chapter 3

++ ++ Chapter 4Chapter 4

Chapter 3Chapter 3

Chapter 4Chapter 4

Chapters 3, 4 and 5Chapters 3, 4 and 5

--

++/insign./insign.

++++

Chapters 2, 3, 4 and 5Chapters 2, 3, 4 and 5ImportantImportant

FACTORS INFLUENCING FACTORS INFLUENCING MIGRATION FLOWS– findings MIGRATION FLOWS– findings IIIIIIEFFECT ON GROSS EFFECT ON GROSS MIGRATION FLOWS:MIGRATION FLOWS:

THEORY:THEORY: FINDINGS:FINDINGS:

Barriers to migration:Barriers to migration:

DistanceDistance

Cultural distanceCultural distance

Neighboring dummyNeighboring dummy

Common historyCommon history

Linguistic DistanceLinguistic Distance

Business tiesBusiness ties

--

++

++

--

-- or no effect/ or no effect/ insignificantinsignificant

++

Chapters 3 and 4Chapters 3 and 4

Chapter 3Chapter 3

Chapter 3Chapter 3++

++

Chapters 2, 3, 4 and 5Chapters 2, 3, 4 and 5

++ ++ Chapter 3Chapter 3

SELECTIVITY IN MIGRATION SELECTIVITY IN MIGRATION FLOWS– findingsFLOWS– findings

Selectivity in migration:Selectivity in migration:

Chapter 3Chapter 3

Chapter 3Chapter 3No direct indications of “country based No direct indications of “country based

selectivity” effects. selectivity” effects.

Some selectivity through “networks” – Some selectivity through “networks” – “networks” more important for immigrants “networks” more important for immigrants coming from low-income countries than for coming from low-income countries than for immigrants coming from high-income immigrants coming from high-income source countries.source countries.

PREDICTIONS OF MIGRATIONPREDICTIONS OF MIGRATION

The obtained coefficients of the migration determinants can be The obtained coefficients of the migration determinants can be

used for prediction of migration potential. used for prediction of migration potential.

Application to a Application to a prediction of migration potential from the new EU prediction of migration potential from the new EU

members into the “old” EU countries in years after the 2004 EU members into the “old” EU countries in years after the 2004 EU

enlargement, 2004–2015. enlargement, 2004–2015. (chapter 5)(chapter 5)

3 assumed scenarios concerning the future economic convergence 3 assumed scenarios concerning the future economic convergence

of the countries.of the countries.

Predicted gross migration flows from 7 Predicted gross migration flows from 7 new EU members into the 12 EEA/EU new EU members into the 12 EEA/EU countries.countries.Average flow 2004-2015, medium convergence Average flow 2004-2015, medium convergence

scenarioscenario

680 1610 1805 3925 4069 4238 4318 4623 6452 10395

274494

321866

52570

50000

100000

150000

200000

250000

300000

350000

Icel

and

Gre

ece

Norw

ay

Sw

eden

Spai

n**

Bel

gium

Switzer

land

Fin

land

Den

mar

k

Net

herla

nds

Ital

y*

Ger

man

y

EEA/EU-1

2

*For Italy, only numbers of Poles are shown. ** For Spain, only numbers of Poles and Czechs are shown.

Predicted migration stocks from 7 new EU Predicted migration stocks from 7 new EU members residing in the 13 EEA/EU members residing in the 13 EEA/EU countries.countries.Year 2000 and 2015, medium convergence Year 2000 and 2015, medium convergence scenario.scenario.

21449 25182 26918 28642 28723 40006 51692 68505 85726

617372

1240148

133224

110257

24520

200000

400000

600000

800000

1000000

1200000

Year 2000

Year 2015

For Spain, only numbers of Poles and Czechs are shown. UK numbers do not contain Baltic countries: Estonia, Latvia and Lithuania.

FACTORS INFLUENCING FACTORS INFLUENCING MIGRATION FLOWS MIGRATION FLOWS summary of the findingssummary of the findings

some policy recommendations for – Europe and Denmark:some policy recommendations for – Europe and Denmark:

– Shift towards economically based selective immigration Shift towards economically based selective immigration policy :policy :

– for Denmark - the point system idea of the welfare for Denmark - the point system idea of the welfare commission might be beneficialcommission might be beneficial

– Emigration from Central and Eastern Europe – forecast for Emigration from Central and Eastern Europe – forecast for EU, prediction for Denmark – no “migration floods” EU, prediction for Denmark – no “migration floods”