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Locher, Lilo
Year of Publication: 
Series/Report no.: 
IZA Discussion paper series 227
Average education of new immigrants from the East European countries and the former Soviet Union (FSU) in Israel declined during the last ten years. I present a simple two-period model of migration with uncertainty about future conditions in both countries and estimate a reduced form, using data from the Israeli 1995 Census and several years of the Israeli Labor Force Survey. Wages in Israel in each period are the result of a human capital investment decision. In this framework, the return to migrating early is higher, the higher the education of a potential migrant, but education also increases the option value of staying. Estimation of a Cox proportionate hazard model and a discrete time hazard model suggest that human capital investment considerations indeed influence the timing of migration. Other variables that make people migrate earlier are being Jewish, being married, and having no children. Economic conditions in the source countries and in the destination country, which are also included in the regressions, do not seem to matter and cover mainly time effects.
Migration decision
human capital investment
migration as an option
duration model
Document Type: 
Working Paper

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