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Migration Dynamics

48 Pages Posted: 19 Oct 2005  

Sergio Vergalli

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

Michele Moretto

University of Padua - Department of Economics; Fondazione Eni Enrico Mattei (FEEM)

Date Written: September 2005

Abstract

This paper tries to explain why most migration flows show some observable jumps in their processes, a phenomenon that seems to be sympathetic with the characteristic of irreversibility of migration. We present a real option model where the choice to migrate depends on both the differential wage between the host country and the country of origin, and on the probability of being fully integrated into the host country. The theoretical results show that the optimal migration decision of a single individual consists of waiting before migrating in a (coordinate) mass of individuals. The dimension of the migration flow depends on the behavioural characteristics of the ethnic groups: the more "sociable" they are, the larger the size of the wave and the lower the differential wage required. A second part of the paper is devoted to calibrating the model and simulating some migration flows to Italy in the last decade. The calibration is able to replicate the observable migration jumps in the short term. In particular, the calibrated model is able to conjecture the induced labour demand elasticity level of the host country and the behavioural rationale of the migrants.

Keywords: Migration, Real Option, Labour Market, Network Effect

JEL Classification: F22, O15, R23

Suggested Citation

Vergalli, Sergio and Moretto, Michele, Migration Dynamics (September 2005). FEEM Working Paper No. 108.05. Available at SSRN: https://ssrn.com/abstract=812986 or http://dx.doi.org/10.2139/ssrn.812986

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

Michele Moretto

University of Padua - Department of Economics ( email )

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

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

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