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Do we follow the money? The drivers of migration across regions in the EU

Do we follow the money? The drivers of migration across regions in the EU. Andrés Rodríguez-Pose London School of Economics and IMDEA Social Sciences Tobias Ketterer University of Nottingham Regional innovation and growth: Theory, empirics and policy analysis 

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Do we follow the money? The drivers of migration across regions in the EU

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  1. Do we follow the money? The drivers of migration across regions in the EU Andrés Rodríguez-Pose London School of Economics and IMDEA Social Sciences Tobias Ketterer University of Nottingham Regional innovation and growth: Theory, empirics and policy analysis  Pécs, Hungary, March 31-April 1, 2011

  2. Background to the presentation Regional differences in income and living standards as the main motivation for migration (Hicks, 1932; Sjaastad, 1962; Todaro, 1968, 1969; Harris and Todaro, 1970) Across regions of Europe Strong regional disparities in wealth, unemployment and economic performance But, relatively low migration Why has interregional mobility in the EU remained low for so long? Do migrants really follow the money? Or are other factors (social networks, place-based externalities) as, if not more, important for migration? Aim Examine the relevance of pecuniary factors in determining migrations trends For 133 regions in the EU, between 1990 and 2006 1

  3. Money and other migration drivers • Money • Differences in wages and expected incomes (Hicks,1932; Sjaastad, 1962; Greenwood, 1997) • Otherforms of income: transfers, welfarepayments, unemployment subsidies (Boyd, 1989; Haapanen and Ritsilä, 2007)

  4. Money and other migration drivers (II) • Non pecuniary drivers • Psychological costs of leaving place of origin (Lee, 1972; Tassinopoulos and Kristensen, 1998) • Probability of finding a job(Todaro, 1969; Pissarides and McMaster, 1990; Jackman and Savouris, 1992; Décressin, 1994) • Place-basedconditions: favourable socio-economicfeatures, adequatehumancaptial, knowledge spillovers (Rudd, 2000; Di Addario and Patachini, 2008; Rodríguez-Pose and Tselios, 2011) • Pastmigrationtrends(Massey and Gracia, 1987; Massey et al., 1993; Massey et al., 1998; Bauer and Zimmermann, 1997; Shah and Menon, 1999) • Urban amenities(Florida, 2002; Ferguson et al., 2007; Partridge, 2010) • Otherstructuralfeatures of the local economy: size, marketpotential, levels of industrial agglomeration

  5. Migration, growth and living standards Migration and economicdynamism Migration and living standards

  6. The model Staticmigrationmodel Migit = α + βdydy it-n + βu u it-n + βyo4 yo4av it-n + βty Ty it-n + βyt0 Yt0 it-n + βdynatdynat it-n + βSFSocialWelfare it-n + βSFSocialFilter it-n + ci+ εit Dynamicmigrationmodel Migit+n = α + βmigMigi,t+(n-1) + βdydy it-n +   βu u it-n + βyo4 yo4av it-n +  βty Ty it-n + βyt0 Yt0 it-n +  βdynatdynat it-n + βSFSocialWelfare it-n +  βSFSocialFilter it-n + ε it

  7. Where

  8. The data • Combination of NUTS2 and NUTS1 (Be, De, UK) regions • EU15 • Countries without regional structure excluded from the analysis (Dr, Irl, Lux) • 133 regions in 12 countries • Period 1990-2006

  9. Static analysis

  10. Dynamic analysis

  11. Country-by-country analysis

  12. Static analysis (II) Pecuniary factors have a rather limited effect on migration Regional growth insignificant Regional GDP per capita positive and significant, but with a small coefficient

  13. Static analysis (III) Unemployment highly significant and with the expected sign, but short-term Regional industry agglomeration no continuous significant influence on migration

  14. Static analysis (IV) Regions with a high share of young people experience migration outflow. Short-term effect Social filter, positive, significant and enduring in time Welfare payments a weak and short-term, but positive associetion with migration

  15. Dynamic analysis (II) Past migration flows highly significant, but more relevant in the short- than in the medium-run Pecunary factors generally not significant

  16. Dynamic analysis (III) Unemployment remains highly significant and with the right sign But the share of young people loses significance Social welfare spending significant in some regressions

  17. Dynamic analysis (IV) National growth strongly significant over time Social filter again positive and significant over time

  18. Country-by-country analysis • Hugevariationsacrosscountries • Pecuniaryeffectssignificant in Germany, Netherlands and Spain • Butonly in Germanywiththerightsign

  19. Conclusions • Results cast doubts about the relevance of traditional migration theory • Little evidence that migrations follows regional wealth or economic dynamism • Other factors are much more important • Likelihood of finding a job (short-term) • Past migration terms (short-term) • Social filter (good educational endowment) (medium-term) • Important differences across countries in Europe • After all, we do not seem to follow the money • We follow our friends, we pursue jobs and a better education for our children

  20. Do we follow the money? The drivers of migration across regions in the EU Andrés Rodríguez-Posea and Tobias Kettererb aLondonSchool of Economics and IMDEA Social Sciences bUniversity of Nottingham More information in http://personal.lse.ac.uk/rodrigu1/ More working papers in http://repec.imdea.org/

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