European Migration Policies: The Effect of Uncertainty

7 Pages Posted: 23 Jun 2012

See all articles by Michele Moretto

Michele Moretto

University of Padua, Dep of Economics and Management

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Date Written: June 20, 2012

Abstract

In our article we study how uncertainty affects migration choice and how networks are able to mitigate its effects. In particular, we describe a real option model where the migration choice depends on both the wage differential between the host country and the country of origin, and on a network of homogeneous immigrants. By looking at the labour market uncertainty, the optimal migration decision of an individual consists of waiting to migrate in a (coordinated) mass of individuals. By looking at policy uncertainty, we try to explain if it is better for the government to tighten or relax limits for immigrants in order to control migration inflows. Our results show that promoting uncertainty over migration limit may improve the government's control on migration inflows (quotas). In particular, we show that if the government controls the information related to the immigration stock it could delay the mass entry of immigrants, maintaining the required stock in the long run and controlling the flows in the short-run. Therefore, if the government's aim is to delay and/or control entry migration waves, it could control the uncertainty on the information related to the immigration quota.

Keywords: Immigration, Real Option, Quota

JEL Classification: J2, J61

Suggested Citation

Moretto, Michele and Vergalli, Sergio, European Migration Policies: The Effect of Uncertainty (June 20, 2012). Review of Environment, Energy and Economics (Re3), June 2012, Available at SSRN: https://ssrn.com/abstract=2089380

Michele Moretto

University of Padua, Dep of Economics and Management ( email )

via Del Santo 33
Padova, 35123
Italy
+39 049 8274265 (Phone)
+39 049 8274211 (Fax)

Sergio Vergalli (Contact Author)

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

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