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<!doctype html>
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<title>Theories of International Mobility and the Incorporation of Immigrants</title>
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<section>
<h2>Theories of International Mobility and the Incorporation of Immigrants</h2>
<h3>Class 2: Economic Determinants of Migration</h3>
<p><a href="http://johnrbpalmer.com">John Palmer</a>
</section>
<section>
<section data-background="images/GrandBazaar.jpg" data-state="footer_gb">
<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<h2>Economics</h2>
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<section data-background="images/GrandBazaar.jpg" data-state="footer_gb">
<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<i>the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses</i>
<p>- Lionel Robbins (1935)</p>
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<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<i>the study of how people interact with each other and with their natural surroundings in producing their livelihoods, and how this changes over time</i>
<p>- The Economy, CORE Project (2015)</p>
</div>
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<section data-background="images/GrandBazaar.jpg" data-state="footer_gb">
<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<h3>Microeconomics</h3>
<p>individual agents and markets</p>
<br>
<h3>Macroeconomics</h3>
<p>entire economy</p>
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<section>
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<h2>Economist's view of migration</h2>
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<section data-background="images/Bundesarchiv_B_145_Bild-F040736-0016,_Salzgitter,_VW_Autowerk.jpg" data-state="footer_migrant_autoworkers">
<div> </div>
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</section>
<section data-background="images/Bundesarchiv_B_145_Bild-F040742-0013,_Hannover,_VW_Autowerk.jpg" data-state="footer_migrant_autoworkers2">
<div> </div>
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</section>
<section>
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<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<h2>Determinants of Migration</h2>
</div>
<style>.footer_b footer:after { content: "Immigration Examination, Halifax, Canada, Public Domain, Wikimedia Commons"; color:white;background-color: rgba(0,0,0,0.5); padding: 5px;}</style>
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<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<h3>Lee's model</h3>
<img class="stretch" src="images/ecomig0x.00x-lee-model.svg">
</div>
<style>.footer_b footer:after { content: "Immigration Examination, Halifax, Canada, Public Domain, Wikimedia Commons"; color:white;background-color: rgba(0,0,0,0.5); padding: 5px;}</style>
</section>
<section>
<h2>Borjas (1989)</h2>
</section>
<section data-background="images/onion.jpg" data-state="footer_onion">
<div style="background-color: rgba(255, 255, 255, .95); padding:20px;">
<h3>Onion Approach</h3>
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</section>
<section>
<h3>The immigration market</h3>
<ul>
Individuals residing in any source country consider the possibility of remaining there or of migrating to a number of potential host countries. Individuals make the migration decision by considering the values of the various alternatives, and choosing the option that best suits them given the financial and legal constraints that regulate the international migration process.
</ul>
</section>
<section>
<h3>The immigration market</h3>
<ul>In a sense, host countries "compete" through these immigration policies for the human and physical capital of the potential migrants. Host countries with a certain set of immigration regulations (for example, those that make it easy to migrate if the potential immigrant has a family member in the host country) attract different types of persons than host countries with other sets of regulations (for example, a point system based on the individual's skills or occupations).</ul>
</section>
<section>
<h3>The immigration market</h3>
<ul>
The immigration market nonrandomly sorts these individuals across host countries. An important contribution
of economic theory is to describe the kind of equilibrium sorting that takes place in this marketplace.
</ul>
</section>
<section>
<h3>Earnings Function</h3>
$$\log w_0 = \textrm{X}\delta_0 + \epsilon_0$$
<br>
$$\log w_1 = \textrm{X}\delta_1 + \epsilon_1$$
</section>
<section>
<ul>What is $\epsilon$?</ul>
<br><br>
<ul>What does it mean for $\epsilon$ to be uncorrelated with X?</ul>
</section>
<section>
$$\epsilon_0 \sim \mathcal{N}\left(0, \sigma^2_0\right)$$
</section>
<section>
<ul>Is it reasonable to assume $\log w$ is normally distributed?</ul>
</section>
<section>
<ul>What is $\rho$?</ul>
<br><br>
<ul>What does it mean for $\rho$ to be positive?</ul>
<ul>What does it mean for $\rho$ to be negative?</ul>
</section>
<section>
<ul>What does it mean for $w_0$ and $w_1$ to represent present values of earnings profiles as opposed to annual earnings?</ul>
</section>
<section>
<ul>What do $\delta_0$ and $\delta_1$ represent?</ul>
</section>
<section>
<h3>Index Function</h3>
$$\textrm{I} = \log \left[ \frac{w_1}{w_0 + C} \right] \approx \left[\textrm{X}\left(\delta_0 - \delta_1\right) - \pi \right] + \left(\epsilon_1 - \epsilon_0 \right)$$
</section>
<section>
<p>What is C?</p>
<p>What is $\pi?$</p>
</section>
<section>
<p>Why does the approximation hold?</p>
<p>The following slides have hints...</p>
</section>
<section>
$$\log \left[ \frac{w_1}{w_0 + C} \right] = \log \left(w_1 \right) - \log \left(w_0 + C \right)$$
</section>
<section>
$$\log \left(w_0 + C \right) = \log\left[w_0\left(1+\frac{C}{w_0}\right)\right] = \log \left(w_0 \right) + \log \left(1 + \frac{C}{w_0}\right)$$
</section>
<section>
<h3>Migration Probability</h3>
$$\textrm{Pr}\left[v > -\textrm{X}\left(\delta_1 - \delta_0 \right) + \pi \right] = 1 - \Phi\left(z\right)$$
<br>
$$v = \epsilon_1 - \epsilon_0$$
<br>
$$z = \frac{-\textrm{X}\left(\delta_1 - \delta_0 \right) + \pi }{\sigma_v}$$
</section>
<section>
<img class='stretch' src="images/normal_cdf.png">
</section>
<section>
<ul>
<li>What is the relationship between emigration rate and host country mean income?</li>
<li>What is the relationship between emigration rate and source country mean income?</li>
<li>What is the relationship between emigration rate and migration costs?</li>
<li>What is the relationship between emigration rate and the payoff differential between host and source country?</li></ul>
</section>
<section>
<i>An economist is a man who states the obvious in terms of the incomprehensible.</i>
<p>- Alfred A. Knopf</p>
</section>
<section>
<ul>
<li>Has Borjas proved that migrants are rational income-maximizers?</li>
<li>Has he proved that there is an "immigration market"?</li>
</ul>
</section>
<section>
<h3>observed characteristics</h3>
$$\textrm{X} = \mu_{\textrm{X}} + \epsilon_{\textrm{X}}$$
</section>
<section>
<h3>Conditional Expectation of Migrants' Observed Characteristics</h3>
$$\textrm{E}(\textrm{X} | I > 0) = \mu_{\textrm{X}} + k(\delta_1 - \delta_0)$$
</section>
<section>
<ul>
<li>When will the mean of migrant's education be above the source country average?</li>
<li>When will the mean of migrant's education be below the source country average?</li>
<li>When will the mean of migrant's education be the same as the source country average?</li>
<li>How important should selectivity based on observed characteristics be?</li>
</ul>
</section>
<section>
<h3>Conditional Expectation of Unobserved Characteristics</h3>
$$\textrm{Q}_0 = \textrm{E}(\epsilon_0 | X, I > 0)$$
<br>
$$\textrm{Q}_1 = \textrm{E}(\epsilon_1 | X, I > 0)$$
</section>
<section>
<ul>
<li>How does positive selection occur?</li>
<li>How does negative selection occur?</li>
<li>How does refugee sorting occur?</li>
</ul>
</section>
<section>
<p>How does social structure fit into our decision-making model?</p>
</section>
<section>
<p>How does risk fit into our decision-making model?</p>
</section>
</section>
<section data-background="images/927px-Taraxacum_sect._Ruderalia_MHNT.jpg" data-state="footer1">
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</section>
</section>
<section>
<section>
<h2>New Economics of Labor Migration</h2>
</section>
<section>
<ul><i>Whereas owners of production inputs or commodities . . . can ordinarily ship them away . . . while themselves staying put, owners of labor must usually move along with their labor.</i></ul>
<br><br>
<ul>- Oded Stark & David E. Bloom, The New Economics of Labor Migration, American Economic Review (1985).</ul>
</section>
<section>
<ul><i>Furthermore, owners of labor have both feelings and independent wills.</i></ul><br><br>
<ul>- Oded Stark & David E. Bloom, The New Economics of Labor Migration, American Economic Review (1985).</ul>
</section>
<section>
<h3>Relative Deprivation</h3>
<ul>
<li>Village A family incomes: 20, 30, 40, 50, <span style="color:red;">60</span></li>
<li>Village B family incomes: 20, <span style="color:red;">60</span>, 65, 70, 75, 80
</li>
</ul>
</section>
<section>
<h3>Skill Levels and Asymmetric Information</h3>
$$W_P(S)$$
$$W_R(S)$$ <br>
<ul>R employers cannot observe true skill of S workers, but they know the distribution and pay based on the average productivity
</ul>
</section>
<section>
<h3>Migrant-Non-Migrant Decision-Making</h3>
<ul>
<li>Remittances and intertemporal contract</li>
<li>Family cohesion</li>
<li>Mutual interdependence</li>
</ul>
</section>
<section>
<h3>Risk Handling</h3>
<ul>
<li>Low or negative earnings correlation</li>
<li>Local Market Failures</li>
</ul>
</section>
</section>
</div>
</div>
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