DP1540 Where do Migrants Go? Risk-Aversion, Mobility Costs and the Locational Choice of Migrants

Author(s):	Francesco Daveri, Riccardo Faini
Publication Date:	December 1996
Keyword(s):	bunching, Migration, risk diversification
JEL(s):	J61, O15
Programme Areas:	Human Resources
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1540

As part of their effort to pool individual risk, households consider spreading their members over a plurality of locations, both inside and outside their country of origin. At the same time, the world is ridden with ?Chinatowns? and ?Little Italies?: people, whenever they move, tend to bunch in the same location. Bunching would appear fundamentally at odds with the desire to diversify risk. In this paper we provide a framework to reconcile both spatial bunching and the spread of migrants, combining risk-aversion and concavity of mobility costs at the household level. Evidence from Southern Italy is consistent with the main predictions from our model.