IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-02498160.html
   My bibliography  Save this paper

How Borrowing Constraints Hinder Migration: Theoretical Insights from a Random Utility Maximization Model

Author

Listed:
  • Léa Marchal

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Claire Naiditch

    (EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - PRES Université Lille Nord de France - Université de Lille, Droit et Santé, LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We provide a theoretical framework to analyze how financial constraints hinder migration. Introducing wealth heterogeneity and borrowing constraints into a random utility maximization model of migration, we find evidence of multilateral resistance to migration stemming from borrowing constraints. We calibrate the model on 22 European countries, and we show that omitting the constraints biases upward the estimation of bilateral migration rates. We then simulate an increase in the bilateral cost of migration to the United Kingdom. We find that omitting the constraints biases downward the change entailed by the cost increase in the bilateral rates of migration to all destinations.

Suggested Citation

  • Léa Marchal & Claire Naiditch, 2019. "How Borrowing Constraints Hinder Migration: Theoretical Insights from a Random Utility Maximization Model," Post-Print hal-02498160, HAL.
    • Handle: RePEc:hal:journl:hal-02498160
    DOI: 10.1111/sjoe.12355
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2013. "Multilateral resistance to migration," Journal of Development Economics, Elsevier, vol. 102(C), pages 79-100.
    2. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457, Elsevier.
    3. Frédéric Docquier & Joël Machado & Khalid Sekkat, 2015. "Efficiency Gains from Liberalizing Labor Mobility," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 303-346, April.
    4. Dustmann, Christian & Okatenko, Anna, 2014. "Out-migration, wealth constraints, and the quality of local amenities," Journal of Development Economics, Elsevier, vol. 110(C), pages 52-63.
    5. Michel Beine & Simone Bertoli & Jesús Fernández-Huertas Moraga, 2016. "A Practitioners’ Guide to Gravity Models of International Migration," The World Economy, Wiley Blackwell, vol. 39(4), pages 496-512, April.
    6. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    7. Halliday, Timothy, 2006. "Migration, Risk, and Liquidity Constraints in El Salvador," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 893-925, July.
    8. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
    9. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    10. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, September.
    11. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
    12. Manuela Angelucci, 2015. "Migration and Financial Constraints: Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 224-228, March.
    13. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    14. Samuel Bazzi, 2017. "Wealth Heterogeneity and the Income Elasticity of Migration," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 219-255, April.
    15. Djajic, Slobodan & Kirdar, Murat G. & Vinogradova, Alexandra, 2016. "Source-country earnings and emigration," Journal of International Economics, Elsevier, vol. 99(C), pages 46-67.
    16. Simone Bertoli & J. Fernandes-Huertas Moraga, 2013. "Multilateral resistance to migration," Post-Print halshs-00820169, HAL.
    17. Lopez, Humberto & Serven, Luis, 2006. "A normal relationship ? Poverty, growth, and inequality," Policy Research Working Paper Series 3814, The World Bank.
    18. Mendola, Mariapia, 2008. "Migration and technological change in rural households: Complements or substitutes?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 150-175, February.
    19. Vanderkamp, John, 1971. "Migration Flows, Their Determinants and the Effects of Return Migration," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1012-1031, Sept.-Oct.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marchal, Léa & Naiditch, Claire & Simsek, Betül, 2021. "Managing Migration Flows Through Foreign Aid," ILE Working Paper Series 46, University of Hamburg, Institute of Law and Economics.
    2. Lea Marchal & Claire Naiditch & Betul Simsek, 2022. "How Foreign Aid Affects Migration: Quantifying Transmission Channels," EGEIWP 02-2022, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Jan 2023.
    3. Bertoli, Simone & Moraga, Jesús Fernández-Huertas & Guichard, Lucas, 2020. "Rational inattention and migration decisions," Journal of International Economics, Elsevier, vol. 126(C).
    4. Albert MILLOGO & Ines TROJETTE & Nicolas PÉRIDY, 2021. "Are government policies efficient to regulate immigration? Evidence from France," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 23-49.
    5. Marina-Selini Katsaiti & Maroula Khraiche, 2023. "Does access to credit alter migration intentions?," Empirical Economics, Springer, vol. 65(4), pages 1823-1854, October.
    6. Lars Ludolph & Barbora Šedová, 2021. "Global food prices, local weather and migration in Sub-Saharan Africa," CEPA Discussion Papers 26, Center for Economic Policy Analysis.
    7. Guichard, Lucas & Machado, Joël, 2024. "The Externalities of Immigration Policies on Migration Flows: The Case of an Asylum Policy," IZA Discussion Papers 16935, Institute of Labor Economics (IZA).
    8. Ludolph, Lars & Sedova, Barbora, 2021. "Global food prices, local weather and migration in Sub-Saharan Africa," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242334, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claire Naiditch & Léa Marchal, 2016. "A Micro-founded Theory of Multilateral Resistance to Migration," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-04127829, HAL.
    2. Beine, Michel & Bierlaire, Michel & Docquier, Frédéric, 2021. "New York, Abu Dhabi, London or Stay at Home? Using a Cross-Nested Logit Model to Identify Complex Substitution Patterns in Migration," IZA Discussion Papers 14090, Institute of Labor Economics (IZA).
    3. Burzyński, Michał, 2018. "Time, Space, And Skills In Designing Migration Policy," Journal of Demographic Economics, Cambridge University Press, vol. 84(4), pages 355-417, December.
    4. Djajic, Slobodan & Kirdar, Murat G. & Vinogradova, Alexandra, 2016. "Source-country earnings and emigration," Journal of International Economics, Elsevier, vol. 99(C), pages 46-67.
    5. Michel Beine & Marco Delogu & Lionel Ragot, 2020. "The role of fees in foreign education: evidence from Italy [Determinants of international student migration]," Journal of Economic Geography, Oxford University Press, vol. 20(2), pages 571-600.
    6. Thu Hien DAO & Frédéric DOCQUIER & Mathilde MAUREL & Pierre SCHAUS, 2017. "Global Migration in the 20th and 21st Centuries: the Unstoppable Force of Demography," Working Paper 96d89f28-0e80-4703-9b33-6, Agence française de développement.
    7. Albert MILLOGO & Ines TROJETTE & Nicolas PÉRIDY, 2021. "Are government policies efficient to regulate immigration? Evidence from France," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 23-49.
    8. Michael Clemens, 2014. "Does Development Reduce Migration? - Working Paper 359," Working Papers 359, Center for Global Development.
    9. Michel Beine & Marco Delogu & Lionel Ragot, 2017. "The Role of Fees in Foreign Education: Evidence From Italy and the United Kingdom," Working Papers 2017-04, CEPII research center.
    10. Simon Winter, 2020. "“It’s the Economy, Stupid!”: On the Relative Impact of Political and Economic Determinants on Migration," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(2), pages 207-252, April.
    11. Clemens, Michael A. & Mendola, Mariapia, 2020. "Migration from Developing Countries: Selection, Income Elasticity, and Simpson's Paradox," IZA Discussion Papers 13612, Institute of Labor Economics (IZA).
    12. Simone Bertoli & Ilse Ruyssen, 2018. "Networks and migrants’ intended destination," Journal of Economic Geography, Oxford University Press, vol. 18(4), pages 705-728.
    13. Bertoli, Simone & Moraga, Jesús Fernández-Huertas & Guichard, Lucas, 2020. "Rational inattention and migration decisions," Journal of International Economics, Elsevier, vol. 126(C).
    14. Romano Piras, 2020. "Internal Migration in Italy: The Role of Migration Networks," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(1), pages 157-195, March.
    15. Leefmans,Naomi & Oomes,Nienke & Rojas Romagosa,Hugo Alexander & Vervliet,Tobias & Berthiaume,Nicolas, 2021. "A Reappraisal of the Migration-Development Nexus : Testing the Robustness of the Migration Transition Hypothesis," Policy Research Working Paper Series 9518, The World Bank.
    16. Michel Beine & Joël Machado & Ilse Ruyssen, 2020. "Do potential migrants internalize migrant rights in OECD host societies?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1429-1456, November.
    17. Michael A. Clemens, 2014. "Does development reduce migration?," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 6, pages 152-185, Edward Elgar Publishing.
    18. Nina Neubecker & Marcel Smolka & Anne Steinbacher, 2017. "Networks And Selection In International Migration To Spain," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1265-1286, July.
    19. Michel Beine & Simone Bertoli & Jesús Fernández-Huertas Moraga, 2016. "A Practitioners’ Guide to Gravity Models of International Migration," The World Economy, Wiley Blackwell, vol. 39(4), pages 496-512, April.
    20. Lionel Ragot & Michel Beine & Marco Delogu, 2017. "Understanding the Impact of Tuition Fees in Foreign Education: the Case of the UK," EconomiX Working Papers 2017-45, University of Paris Nanterre, EconomiX.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-02498160. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.