The new economics of labor migration

This paper reviews selected theoretical and empirical developments in the field of labor migration economics. The migration behavior of individuals differs in accordance with their perceived relative deprivation; those who are relatively more deprived tend to have stronger incentive to migrate than those who are relatively less deprived. Moreover a reference group characterized by more income inequality is likely to generate more relative deprivation. Highly skilled workers are also more likely to migrate. Migration decisions are often made jointly by the migrant and nonmigrant with a contractual arrangement regarding the sharing of costs and returns. The exchange of commitments to share income provides coinsurance. Of particular interest are the determinants of the speed of adoption of migration as an innovation and the characteristics associated with the delay in the adoption of innovation. New econometric techniques including techniques for the analysis of qualitative dependent variables techniques that correct for sample selection bias and those for the analysis of longitudinal data have substantially benefited empirical research in this area. New methods that can correct for the biased estimate of the wages particular individuals would receive at 2 or more locations at the same point in time allow researchers to test locational decsion making models. Estimates of these structural models of labor migration support the hypothesis that individuals respond to income incentives in making the decsion to migrate. Further research is needed on the pazzling observation that migrant workers earn less than native-born workers with similar characteristics during the 1st few years after migration but more thereafter. Other topics that need further research include the macroeconomic effects of migration the microeconomic and macroeconomic relationships between aging and labor migration and the migration behavior of dual-earner families.