FEEM working papers "Note di lavoro" series
2006 .004

The Role of Community in Migration Dynamics


Authors: Sergio Vergalli
Series: Economy and Society
Editor: Gianmarco I.P. Ottaviano
Type: Journal
Keywords: Migration,Real option,Theory of clubs,Network effect
JEL n.: F22,H49,O15,R23
JEL: Labour
Pages: Vol. 22, No. 3, pp. 547-567(21)
Date: 09/2008

Abstract

In this paper, we present a theoretical model that, implementing the pioneering work of Burda (1995), based on the Real Option Theory, investigates the roots of the migration dynamics. In the model the decision to migrate of each individual depends not only on the wage differential, but also on a U-shaped benefit function of a community of homogeneous ethnic individuals, modelled according to the "theory of clubs". The theoretical results are able to give an explanation to the observable "jumps" in the migration flows and to describe how the trigger for entry can change depending on the dimension of the district. The analysis of the results also sheds light on the dynamics of the districts’ development: some possible rigidities in the adjustment of the district dimension, as regards the optimal levels, could magnify the hysteresis process.

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