Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the Us

44 Pages Posted: 27 Sep 2002

See all articles by Thomas K. Bauer

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

Gil S. Epstein

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics; University College London - CReAM - Centre for Research and Analysis of Migration

Ira N. Gang

Rutgers University - Economics Department; IZA Institute of Labor Economics

Date Written: August 2002

Abstract

This Paper addresses the question: why and where do immigrants cluster? We examine the relative importance and interaction of two alternative explanations of immigrant clustering: (1) network externalities and (2) herd behavior. We advance the theory by presenting a framework encompassing both network and herd effects, and by delineating various types of network and herd effects in our empirical work. In order to distinguish between herd and network externalities, we use the Mexican Migration Project data. Our empirical results show that both network externalities and herds have significant effects on the migrant's decision of where to migrate. Moreover, the significance and size of the effects vary according to the legal status of the migrant and whether the migrant is a 'new' or a 'repeat' migrant. The network-externality effect has an inverse U shape, not simply a linear positive effect as often presented in the literature. Neglecting herds and/or networks, or the inverse U shape of network effects leads to faulty conclusions about migrant behavior.

Keywords: Herd effects, networks, immigration, location choice

JEL Classification: F22, J61

Suggested Citation

Bauer, Thomas K. and Epstein, Gil S. and Gang, Ira N., Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the Us (August 2002). CEPR Discussion Paper No. 3505. Available at SSRN: https://ssrn.com/abstract=333740

Thomas K. Bauer (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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IZA Institute of Labor Economics ( email )

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Germany
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+49 228 38 94 510 (Fax)

Gil S. Epstein

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 531 8937 (Phone)
+972 3 535 3180 (Fax)

HOME PAGE: http://faculty.biu.ac.il/~epsteig/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

Drayton House
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London, WC1H 0AX
United Kingdom

Ira N. Gang

Rutgers University - Economics Department ( email )

75 Hamilton Street
ECONOMICS, New Jersey Hall, Rutgers University
New Brunswick, NJ 08901-1248
United States
732-932-7363 (Phone)
732-932-7416 (Fax)

HOME PAGE: http://econweb.rutgers.edu/gang/research

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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