Risk Attitudes and Household Migration Decisions

67 Pages Posted: 2 Oct 2017

See all articles by Christian Dustmann

Christian Dustmann

University College London; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Francesco Fasani

Queen Mary, University of London

Xin Meng

Australian National University; IZA Institute of Labor Economics

Luigi Minale

Universidad Carlos III de Madrid

Multiple version iconThere are 2 versions of this paper

Date Written: February 2017

Abstract

This paper analyses the relation between individual migrations and the risk attitudes of other household members when migration is a household decision. We develop a simple model that implies that which member migrates depends on the distribution of risk attitudes among all household members, and that the risk diversification gain to other household members may induce migrations that would not take place in an individual framework. Using unique data for China on risk attitudes of internal (rural-urban) migrants and the families left behind, we empirically test three key implications of the model: (i) that conditional on migration gains, less risk averse individuals are more likely to migrate; (ii) that within households, the least risk averse individual is more likely to emigrate; and (iii) that across households, the most risk averse households are more likely to send migrants as long as they have at least one family member with sufficiently low risk aversion. Our results not only provide evidence that migration decisions are taken on a household level but also that the distribution of risk attitudes within the household affects whether a migration takes place and who will emigrate.

Keywords: Risk Aversion, Internal Migration, Household Decisions

JEL Classification: J61, 015, R23, D81

Suggested Citation

Dustmann, Christian and Fasani, Francesco and Meng, Xin and Minale, Luigi, Risk Attitudes and Household Migration Decisions (February 2017). Centro Studi Luca d'Agliano Development Studies Working Paper No. 423. Available at SSRN: https://ssrn.com/abstract=3044497 or http://dx.doi.org/10.2139/ssrn.3044497

Christian Dustmann

University College London ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7679 5832 (Phone)
+44 20 7916 2775 (Fax)

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Francesco Fasani

Queen Mary, University of London ( email )

Xin Meng

Australian National University ( email )

Research School of Economics
College of Business and Economics
Canberra ACT 0200
Australia
+61 26249 3102 (Phone)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Luigi Minale (Contact Author)

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, 28903
Spain

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