|
|
Migration
More General Approach
Why do people
migrate? Economic motives are clearly important, and a great deal of
empirical work in labour economics supports the hypothesis that the
migration rate is sensitive to the difference in income between sending
and receiving countries. Most research in this area involves estimating
a single regression equation, using time series data on migration and
such explanatory variables as the real wage or income difference and a
measure of relative unemployment levels. The problem with this 'single
equation' approach is its assumption that the migration itself has no
effect on the wage rate in either the sending or receiving country. Such
an assumption might seem appropriate when migration is small relative to
the labour forces in the two countries, but evidently this is not so
with most important migrations. A large influx of migrants into the
receiving country may increase the supply of labour and this may lower
the real wage.
A decade ago Jeffrey Williamson argued for a general equilibrium
approach to international migration. He proposed a simple model which
explained labour supply and demand in the sending and receiving
countries, wage levels and migration. The model could then be solved to
obtain an equation explaining migration in terms of variables which are
exogenous or determined outside the model. This 'reduced form' migration
equation was estimated by Williamson using historical data on migration
between four European economies and the United States between 1870 and
1914. His 'reduced form' results were in broad agreement with the
underlying theory. When the complete model was estimated, however, these
findings were not supported.
In Discussion Paper No. 72, Patrick Geary and CEPR Research
Fellow Cormac O Grada undertake a closer examination of
Williamson's model. They argue that it is less general equilibrium in
nature than might first appear. The analysis and estimation involves
migration into the US from a single sending country, and
migration from other sending countries is not fully incorporated into
the model. To allow for this would require far more data than are
available. Geary and O Grada suggest ways of extending Williamson's
model. These extensions yield more interesting results for the migration
equation but distinctly mixed results overall. The authors conclude that
Williamson's framework is potentially better suited to the study of
modern migrations, for which there are better data.
Modelling Emigration to the New World: Some Problems
P T Geary and C O Grada
Discussion
Paper No.72, August 1985 (HR)
|
|