During the period of mass migrations to the New World, annual changes in flows of migrants were both large and volatile. Previous studies of various European countries' migrations have used models with ad hoc specifications, which has made interpretation of their coefficients difficult. In Discussion Paper No. 771, Research Fellow Timothy Hatton re-examines time-series movements in aggregate emigration from the UK during 1870-1913, based on a microeconomic model of the migration decision with a specific functional form and dynamic structure. In his model, migrants are risk averse and therefore attach a significant weight to the probability of gaining employment; potential migrants compare the net present values of expected utility streams at home and abroad on the basis of past experience; they also compare the present values of migrating now and in the future.

This time-series model yields coefficients which can be interpreted directly. Hatton reports that the foreign and domestic employment rates and the relative real wage all enter the equation in both changes and levels; with one exception, the model predicts the signs of all variables correctly. Both relative wage and employment conditions play important roles, and risk aversion can explain the large effects of overseas employment. In the long run, trends in the wage ratio can explain most of the trend in the emigration rate, but changes in employment rates, in particular the overseas rate, account for much of the short-run volatility.

A Model of UK Emigration, 1870-1913
Timothy J Hatton

Discussion Paper No. 771, March 1993 (HR)