Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74183
Authors: 
Vergalli, Sergio
Year of Publication: 
2006
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 123.2006
Abstract: 
This work is devoted to study the role of combined entry and exit strategies in the migration process. We develop a real option model in which the community of immigrants in the host country is described as a club and the immigrants benefits is a U-shaped function, depending on the dimension of the district. There exist two threshold levels: the first one triggers the migration choice, while the second triggers the return to the country of origin. The theoretical results show that the phenomenon of hysteresis is amplified by the existence of a community both in the entry case and in the exit case. Furthermore, the community can reduce the minimum wage level required to trigger both exit and entry: this fact could explain why in some cases we observe migration inflows with a low wage differential and also with underunemployment. We show also some possible further extensions of the model: in one case we introduce a possible way to select the entrants’ skills and in another case we show some theoretical implementations to include possible policy shocks in the migrant’s choice.
Subjects: 
Migration
Real Option
Theory of Clubs
Network Effect
JEL: 
F22
H49
O15
R23
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.