Labor Migrant Networks: Growth, Saturation, and Deflection to New Labor Markets

Abstract

We present a model of the evolution of labor migrant networks. Agents use networks to migrate to certain destinations or go to different locations and start new networks there. As networks expand, the number of search processes increases and the relative search costs decrease, making the option of searching for jobs through networks very attractive. Ceteris paribus, the time in which vacancies are spotted is also delayed. If the search costs are a function of time, the value of using a network is a concave function of the network size. We identify the size for which creating a network is more profitable than joining one, this represents the point of economic saturation that leads to the dispersion of migration. We find that the dispersion may occur before a destination runs out of vacancies. We also show that the collective gains of migration may increase if migrants create networks before locations reach their full labor capacity.

Keywords: Migration, Network formation, Job search, Stochastic processes