IDEAS home Printed from https://ideas.repec.org/p/yca/wpaper/2002_01.html
   My bibliography  Save this paper

Migration, Family, and Risk Diversification

Author

Listed:
  • Kong-Pin Chen

    (Academia Sinica and National Taiwan University, Taiwan)

  • Shin-Hwang Chiang

    (York University, Canada)

  • Siu-Fai Leung

    (Hong Kong University of Science And Technology, Hong Kong)

Abstract

This paper proposes a formal model of migration in which workers are heterogeneous and markets are stochastically correlated. We derive and characterize the optimal migration pattern of a family. It is shown to depend on differences in expected earnings, costs of migration, income risks, and more importantly market correlations. We show that migration can take place even when migrants earn less abroad and, more surprisingly, when earnings in the foreign country are riskier for every member of the family. Moreover, it may well be an optimal arrangement to have only dependents migrate, thus rationalizing the recent dependent-oriented migration flows from places like Hong Kong and Taiwan. We also provide some evidence in support of our theory.

Suggested Citation

  • Kong-Pin Chen & Shin-Hwang Chiang & Siu-Fai Leung, 2002. "Migration, Family, and Risk Diversification," Working Papers 2002_01, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:2002_01
    as

    Download full text from publisher

    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/migr3.pdf
    File Function: First version, 2002
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Neumark, David & Postlewaite, Andrew, 1998. "Relative income concerns and the rise in married women's employment," Journal of Public Economics, Elsevier, vol. 70(1), pages 157-183, October.
    2. repec:bla:econom:v:68:y:2001:i:270:p:221-41 is not listed on IDEAS
    3. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
    4. Bruno S. Frey & Alois Stutzer, 1999. "Measuring Preferences by Subjective Well-Being," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 755-778, December.
    5. Larry A. Sjaastad, 1970. "The Costs and Returns of Human Migration," Palgrave Macmillan Books, in: Harry W. Richardson (ed.), Regional Economics, chapter 9, pages 115-133, Palgrave Macmillan.
    6. Platt, Stephen & Micciolo, Rocco & Tansella, Michele, 1992. "Suicide and unemployment in Italy: Description, analysis and interpretation of recent trends," Social Science & Medicine, Elsevier, vol. 34(11), pages 1191-1201, June.
    7. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    8. William A. Darity & Arthur H. Goldsmith, 1996. "Social Psychology, Unemployment and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 121-140, Winter.
    9. Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 51(1), pages 64-81, October.
    10. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 617-650.
    11. Daveri, Francesco & Faini, Riccardo, 1999. "Where Do Migrants Go?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 595-622, October.
    12. Katz, Eliakim & Stark, Oded, 1986. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 134-149, January.
    13. Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," NBER Working Papers 5989, National Bureau of Economic Research, Inc.
    14. Andrew Clark & Yannis Georgellis & Peter Sanfey, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    15. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    16. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-196, October.
    17. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May.
    18. Futagami, Koichi & Shibata, Akihisa, 1998. "Keeping one step ahead of the Joneses: Status, the distribution of wealth, and long run growth," Journal of Economic Behavior & Organization, Elsevier, vol. 36(1), pages 109-126, July.
    19. Blanchflower, David G & Oswald, Andrew J, 1994. "Estimating a Wage Curve for Britain: 1973-90," Economic Journal, Royal Economic Society, vol. 104(426), pages 1025-1043, September.
    20. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1371-1391.
    21. Ghatak, Subrata & Levine, Paul & Price, Stephen Wheatley, 1996. "Migration Theories and Evidence: An Assessment," Journal of Economic Surveys, Wiley Blackwell, vol. 10(2), pages 159-198, June.
    22. Oded Stark, 1991. "The Migration of Labor," Blackwell Books, Wiley Blackwell, number 1557860300, April.
    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. Yigit Aydede, 2017. "Immigration and location choices of native-born workers in Canada," Papers in Regional Science, Wiley Blackwell, vol. 96, pages 113-134, March.
    2. Mohammad Arzaghi & Anil Rupasingha, 2013. "Migration As A Way To Diversify: Evidence From Rural To Urban Migration In The U.S," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 690-711, October.
    3. Richter, Susan M., 2008. "The Insurance Role of Remittances on Household Credit Demand," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6261, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Tarbalouti, Essaid, 2008. "Investissement, protectionnisme et décision de migration internationale [Investment, protectionism and decision of international migration]," MPRA Paper 56310, University Library of Munich, Germany.
    5. Akgüç, Mehtap & Liu, Xingfei & Tani, Massimiliano & Zimmermann, Klaus F., 2016. "Risk attitudes and migration," China Economic Review, Elsevier, vol. 37(C), pages 166-176.
    6. Bratti, Massimiliano & Fiore, Simona & Mendola, Mariapia, 2016. "Family Size, Sibling Rivalry and Migration: Evidence from Mexico," IZA Discussion Papers 10462, Institute of Labor Economics (IZA).
    7. Maurice Kugler, 2006. "Migrant Remittances, Human Capital Formation and Job Creation Externalities in Colombia," Borradores de Economia 370, Banco de la Republica de Colombia.
    8. Michael A. Clemens & Hannah M. Postel, 2018. "Deterring Emigration with Foreign Aid: An Overview of Evidence from Low‐Income Countries," Population and Development Review, The Population Council, Inc., vol. 44(4), pages 667-693, December.
    9. Siriwardhane, Dinesha & Amaratunge, Sampath, 2018. "Remittances and Risk Diversification in Developing Country Context: Evidence from Sri Lanka," MPRA Paper 107235, University Library of Munich, Germany, revised 04 Jun 2018.
    10. An, Galina & Becker, Charles M., 2013. "Uncertainty, Insecurity, and Emigration from Kazakhstan to Russia," World Development, Elsevier, vol. 42(C), pages 44-66.
    11. Klöble, Katrin, 2021. "A behavioural perspective on the drivers of migration: Studying economic and social preferences using the Gallup World Poll," IDOS Discussion Papers 4/2021, German Institute of Development and Sustainability (IDOS).
    12. Michael Clemens and Timothy N. Ogden, 2014. "Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development- Working Paper 354," Working Papers 354, Center for Global Development.
    13. Xavier Chojnicki & Ainura Uzagalieva, 2008. "Labor Migration from East to West in the Context of European Integration and Changing Socio-political Borders," CASE Network Studies and Analyses 0366, CASE-Center for Social and Economic Research.
    14. Nielsen, Helena Skyt & Svarer, Michael, 2006. "Educational Homogamy: Preferences or Opportunities?," IZA Discussion Papers 2271, Institute of Labor Economics (IZA).
    15. Gröger, André, 2021. "Easy come, easy go? Economic shocks, labor migration and the family left behind," Journal of International Economics, Elsevier, vol. 128(C).
    16. Chaitali Sinha, 2017. "International Migration and Welfare Implications," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(2), pages 209-229, December.
    17. Pylypchuk, Yuriy, 2009. "Effects of immigration on the health insurance status of natives," Journal of Health Economics, Elsevier, vol. 28(5), pages 1028-1037, September.
    18. Simiao Chen & Zhangfeng Jin & Klaus Prettner, 2023. "Can I live with you after I retire? Retirement, old age support and internal migration in a developing country," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 964-988, August.
    19. Ahsan, S. Quamrul, 2007. "Temporary Migration, Labour Supply and Welfare," Working Papers in Economics 01/07, University of Bergen, Department of Economics.
    20. Ali GÖKHAN & Alpay FILIZTEKIN, 2008. "The Determinants of Internal Migration In Turkey," EcoMod2008 23800044, EcoMod.
    21. Jessica Pearlman & Lisa D. Pearce & Dirgha J. Ghimire & Prem Bhandari & Taylor Hargrove, 2017. "Postmarital Living Arrangements in Historically Patrilocal Settings: Integrating Household Fission and Migration Perspectives," Demography, Springer;Population Association of America (PAA), vol. 54(4), pages 1425-1449, August.

    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. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    2. Pohlan, Laura, 2019. "Unemployment and social exclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 273-299.
    3. Lídia Farré & Francesco Fasani & Hannes Mueller, 2018. "Feeling useless: the effect of unemployment on mental health in the Great Recession," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-34, December.
    4. Nattavudh Powdthavee, 2005. "Unhappiness and Crime: Evidence from South Africa," Economica, London School of Economics and Political Science, vol. 72(287), pages 531-547, August.
    5. Nattavudh Powdthavee, 2012. "Jobless, Friendless and Broke: What Happens to Different Areas of Life Before and After Unemployment?," Economica, London School of Economics and Political Science, vol. 79(315), pages 557-575, July.
    6. Alois Stutzer & Rafael Lalive, 2004. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 696-719, June.
    7. Nattavudh Powdthavee & James Vernoit, 2012. "The Transferable Scars: A Longitudinal Evidence of Psychological Impact of Past Parental Unemployment on Adolescents in the United Kingdom," CEP Discussion Papers dp1165, Centre for Economic Performance, LSE.
    8. Becchetti, Leonardo & Castriota, Stefano & Giuntella, Giovanni Osea, 2010. "The effects of age and job protection on the welfare costs of inflation and unemployment," European Journal of Political Economy, Elsevier, vol. 26(1), pages 137-146, March.
    9. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
    10. Dominik Buttler, 2022. "Employment Status and Well-Being Among Young Individuals. Why Do We Observe Cross-Country Differences?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 409-437, November.
    11. John H. Tyler, 2003. "Using State Child Labor Laws to Identify the Effect of School-Year Work on High School Achievement," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 353-380, April.
    12. Akgüç, Mehtap & Liu, Xingfei & Tani, Massimiliano & Zimmermann, Klaus F., 2016. "Risk attitudes and migration," China Economic Review, Elsevier, vol. 37(C), pages 166-176.
    13. Martin Binder & Alex Coad, 2015. "Heterogeneity in the Relationship Between Unemployment and Subjective Wellbeing: A Quantile Approach," Economica, London School of Economics and Political Science, vol. 82(328), pages 865-891, October.
    14. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
    15. Suppa, Nicolai, 2021. "Unemployment and subjective well-being," GLO Discussion Paper Series 760, Global Labor Organization (GLO).
    16. Avdic, Daniel & de New, Sonja C. & Kamhöfer, Daniel A., 2020. "Economic downturns and mental wellbeing," DICE Discussion Papers 337, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    17. Carsten Ochsen, 2011. "Subjective well‐being and aggregate unemployment: further evidence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(5), pages 634-655, November.
    18. Nattavudh Powdthavee, 2003. "Are there Regional Variations in the Psychological Cost of Unemployment in South Africa?," Labor and Demography 0310006, University Library of Munich, Germany, revised 28 Oct 2003.
    19. repec:eee:labchp:v:3:y:1999:i:pc:p:3085-3139 is not listed on IDEAS
    20. A. Gentili, 2013. "Migration Costs and Networks: household optimal investment in migration," Working Papers wp867, Dipartimento Scienze Economiche, Universita' di Bologna.
    21. Alois Stutzer & Rafael Lalive, 2002. "Soziale Arbeitsnorm und Arbeitslosigkeit in der Schweiz," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(III), pages 293-316, September.

    More about this item

    Keywords

    Migration; Emigration; Family; Risk Diversification; Dependents;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

    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:yca:wpaper:2002_01. 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: Support (email available below). General contact details of provider: https://edirc.repec.org/data/dyorkca.html .

    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.