The Effect of Networks and Risk Attitudes on the Dynamics of Migration
Lead PI:Gareth Bennett
Abstract:This paper investigates how the average risk characteristics of a group of international migrants changes over time, and how this dynamic is affected by the changing size of migrant networks in the receiving country. The theoretical model shows that as the size of the migrant network increases, uncertainty is reduced, altering the composition of migrants and the timing of the migration decision. The model provides three main results. Firstly, the average migrant will be more risk averse when more individuals from the source country are present in the receiving country. Secondly, when network effects are stronger all individuals, apart from the most risk loving, will migrate sooner. Thirdly, when network effects are stronger the rate of migration will be greater. Based on these theoretical findings, policy implications for both the sending and receiving country are discussed. This paper will test the theoretical model using data from the American Community Survey.
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