Income Maximization and the Selection and Sorting of International Migrants

Abstract

Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more-educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more-educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.

Remittances, migrants' education and immigration policy: Theory and evidence from bilateral data

“…However, the zero observations are dropped from the sample in such speci…cations since the natural log of zero is unde…ned. In that case, the results 23 In line with Grogger and Hanson (2011). 24 We are unable, however, to use a variable capturing the vintage of the migration stock.…”

“…The EU database (labeled as database I) is documented in a report of Jimenez- Martin, Jorgensen and Labeaga (2007) for the European Commission. It provides yearly bilateral remittances data from 16 EU origin countries 6 to 33 destinations 7 from 2000 to 2005.…”

Networks and Selection in International Migration to Spain

“…Bertoli (2010) uses rich individual-level data on Ecuadorian emigrants, confirming a positive interaction between the size of the ethnic community abroad and the extent of negative self-selection. Grogger & Hanson (2011) touch upon this interaction as well; see their robustness checks in table 7 on page 53. 9 In Ortega & Peri (2009), the first decision of individuals is between going abroad and staying at home.…”

“…The underlying hypothesis is that historical bilateral migration flows correlate with the migrant stocks in Spain even after a relatively long period of time, but not with the unobserved determinants of the recent immigration boom. 25 We use the square of the historical bilateral 23 Note that this more encompassing model does not allow us to identify the coefficient of the bilateral investment term because data on investment are only available at the regional level. 24 Notice that the full network elasticity includes the effects operating through the multilateral resistance term.…”

“…In what follows, we assume that these effects are negligibly small when we are referring to the network elasticity. 25 The year 1988 is the first year for which such detailed information are available. It is well before the start of the Spanish immigration boom.…”