The Role of Risk and Risk Aversion in an Individual's Migration Decision

Wang, Tan; Wirjanto, Tony S.

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The Role of Risk and Risk Aversion in an Individual's Migration Decision

Stachastic Models, Vol. 20, No. 2, pp. 129-147, 2004

Posted: 31 Mar 2013

See all articles by Tan Wang

Tan Wang

University of British Columbia (UBC) - Division of Finance; China Academy of Financial Research (CAFR)

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance; University of Waterloo, Department of Statistics & Actuarial Science

Date Written: 2004

Abstract

This paper proposes a simple, partial equilibrium model for studying an individual’s migration decisions. It shows that an individual may choose to delay migration when the condition appears to be favorable, giving rise to the “waiting” behavior observed in the data. Using a closed-form solution, it also examines how the duration of the waiting is affected by a number of economic actors such as the risks associated with the wages in regions of origin and destination, the individual’s attitude toward risk, etc.

Keywords: Migration, Optimal stopping time, Risk aversion, Uncertainty

JEL Classification: D80, R23, R51

Suggested Citation: Suggested Citation

Wang, Tan and Wirjanto, Tony S., The Role of Risk and Risk Aversion in an Individual's Migration Decision (2004). Stachastic Models, Vol. 20, No. 2, pp. 129-147, 2004, Available at SSRN: https://ssrn.com/abstract=2241886