This paper aims at assessing the role of market linkages in shaping the spatial distribution of earnings. Using a space-time panel data on Italian provinces, I structurally estimate a NEG model in order to both test the coherence of theory with data, as well as to give a measure of the extent of spatial externalities. Particular attention has been paid to those endogeneity issues that arise when dealing with both structural models and spatial data. Results suggest that final demand linkages influence the location of economic activities and that their spread over space is, contrary to previous findings, not negligible.Keywords: Economic Geography, Spatial Externalities, Market Potential.JEL Codes: F12, R12, R32. * I thank Salvador Barrios, Luisito Bertinelli, Miren Lafourcade, Andrea Lamorgese, Thierry Magnac, Thierry Mayer, Dominique Peeters, Susana Peralta, Antonio Teixeira, Jaçques Thisse and LASERE seminar participants at CORE for helpful comments and suggestions. I am also grateful to Claire Dujardin, Ornella Montalbano, and Renato Santelia for providing me with local data on distances and economic indicators.

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a b s t r a c tThis paper tests how migrants' willingness to remit changes when given the ability to direct remittances to educational purposes using different forms of commitment. Variants of a dictator game in a lab-in-the-field experiment with Filipino migrants in Rome are used to examine remitting behavior under varying degrees of commitment. These range from the soft commitment of simply labeling remittances as being for education, to the hard commitment of having funds directly paid to a school and the student's educational performance monitored. We find that the introduction of simple labeling for education raises remittances by more than 15%. Adding the ability to directly send this funding to the school adds only a further 2.2%. We randomly vary the information asymmetry between migrants and their most closely connected household, but find no significant change in the remittance response to these forms of commitment as information varies. Behavior in these games is then shown to be predictive of take-up of a new financial product called EduPay, designed to allow migrants to directly pay remittances to schools in the Philippines. We find this take-up is largely driven by a response to the ability to label remittances for education, rather than to the hard commitment feature of directly paying schools.

In this paper we show that highly skilled clandestine migrants are more likely to return home than\ud migrants with low or no skills when illegality causes “skill waste”, i.e. when illegality reduces the rate\ud of return of individual capabilities (i.e. skills and human capital) in the country of destination. In a\ud simple life-cycle framework, illegality is modeled as a tax on skills that reduces the opportunity cost\ud of returning home particularly for the highly skilled. This proposition is tested on a sample of apprehended\ud immigrants that unlawfully crossed the Italian borders in 2003. The estimation confirms that the intention to return to the home country is more likely for highly skilled illegal immigrants. The empirical\ud results of this paper attenuate the common wisdom on the return decisions of legal migrants, according to which low-skill individuals are more likely to go back home (mainly because of negative selfselection)

a b s t r a c tThis paper tests how migrants' willingness to remit changes when given the ability to direct remittances to educational purposes using different forms of commitment. Variants of a dictator game in a lab-in-the-field experiment with Filipino migrants in Rome are used to examine remitting behavior under varying degrees of commitment. These range from the soft commitment of simply labeling remittances as being for education, to the hard commitment of having funds directly paid to a school and the student's educational performance monitored. We find that the introduction of simple labeling for education raises remittances by more than 15%. Adding the ability to directly send this funding to the school adds only a further 2.2%. We randomly vary the information asymmetry between migrants and their most closely connected household, but find no significant change in the remittance response to these forms of commitment as information varies. Behavior in these games is then shown to be predictive of take-up of a new financial product called EduPay, designed to allow migrants to directly pay remittances to schools in the Philippines. We find this take-up is largely driven by a response to the ability to label remittances for education, rather than to the hard commitment feature of directly paying schools.