ECON 429 Lecture Notes - Lecture 13: Risk Neutral, Ethnic Enclave, Relative Deprivation

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To generalize: economists view migration as occurring when the benefits (b) net of the costs (c) and opportunity costs (oc) of migration are positive. Perhaps a little vague (but so are theories sometimes) but nice tool to: think about migration, classify determinants. It applies to both international and domestic migration. Now that we have a structure, we can sketch a basic model of migration. B= wa, wage in the home country. Oc= wh, forgone earnings in the home country. Migration occurs when the wage differential, net of travel costs, is positive. Predictions: migration is higher between countries: with higher wage differentials, smaller geographic distance (if travel costs related to distance). This very simple structure is at the core of economic analyses of migration determinants. However, wage differential and travel costs are not the only determinants of migration, consistent with the fact that many individuals with wa - wh - t > 0 actually do not migrate.

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