The effect of income and immigration policies on international migration

TLDR: In this paper, the authors present an empirical model of migration choice across multiple destinations that allows for unobserved individual heterogeneity and derive a structural estimating equation, showing that international migration flows are highly responsive to income per capita at destination.

Abstract: This article makes two contributions to the literature on the determinants of international migration flows. First, we compile a new dataset on annual bilateral migration flows covering 15 OECD destination countries and 120 sending countries for the period 1980–2006. The dataset also contains data on time-varying immigration policies that regulate the entry of immigrants in our destination countries over this period. Second, we present an empirical model of migration choice across multiple destinations that allows for unobserved individual heterogeneity and derive a structural estimating equation. Our estimates show that international migration flows are highly responsive to income per capita at destination. This elasticity is twice as high for within-European Union (EU) migration, reflecting the higher degree of labor mobility within the EU. We also find that tightening of laws regulating immigrant entry reduce rapidly and significantly their flow.