International handbook on the economics of migration

INTERNATIONAL HANDBOOK ON THE
ECONOMICS OF MIGRATION


Acclaim for the International Handbook on the Economics of Migration
‘Constant and Zimmermann have assembled a collection of essays that is remarkable in one
extremely important way: it integrates many novel research topics into the mainstream immigration literature, including ethnic hiring patterns, obesity, the economic consequences of interethnic
marriages, the link between natural disasters and migration, immigrant time use, and the relationship between migration and happiness. These survey papers are destined to become beacons for
future researchers as each of these topics will inevitably receive much more attention in future
research.’

– George Borjas, Harvard University, USA
‘This is an extremely impressive volume which guides readers into thinking about migration in
new ways. In its various chapters, international experts examine contemporary migration issues
through a multitude of lenses ranging from child labor, human trafficking and jobs to the political
economy of migration and refugees. The result is a fascinating assessment of the role of migration
in driving population change in the modern age. This will surely serve as a reference volume for
those interested in migration for years to come.’
– Deborah Cobb-Clark, Melbourne Institute of Applied Economic
and Social Research, Australia
‘A comprehensive, truly encyclopedic collection of original surveys and essays discussing migration and topics related to the movement of people among countries and areas. The studies both
present and review the literature critically and in many cases offer new results. The basic theory is
laid out right from the start, providing a nice introduction and framework for the other 27 chapters. While most are interesting and worth reading, as a novice in the field of migration I found the
essays on human smuggling and natural disasters to be particularly enlightening and important.
I can recommend this Handbook to any labor economist or sociologist with a scholarly interest,
either for research or for instruction, in this general area. The volume is definitive.’
– Daniel S. Hamermesh, University of Texas at Austin, USA
and Royal Holloway, University of London, UK
‘As immigration has spread from traditional receiving nations to developed countries throughout
the world, the economics of migration has become a burgeoning field of research. Amelie Constant

and Klaus Zimmermann’s International Handbook offers an excellent, state-of-the-art guide to the
rapidly changing intellectual terrain, providing comprehensive coverage of the topics necessary to
comprehend patterns and processes of migration in the world today. It will be an indispensable
guide to scholars and policy-makers for years to come.’
– Douglas S. Massey, Princeton University, USA
‘The International Handbook on the Economics of Migration is an excellent book that broadens our
understanding of the economics of migration. It covers classic issues related to immigration such
as labor market integration and wages as well as much newer and less explored aspects of it, such
as happiness, religiosity and crime. I commend Constant and Zimmermann for gathering an excellent team of young and more experienced scholars, and for producing a book that will become an
important reference in teaching and learning about immigration.’
– Giovanni Peri, University of California, Davis, USA


International Handbook on the
Economics of Migration

Edited by

Amelie F. Constant
George Washington University and Temple University, USA and IZA,
Bonn, Germany

Klaus F. Zimmermann
IZA and Bonn University, Bonn, Germany

Edward Elgar

Cheltenham, UK • Northampton, MA, USA

© Amelie F. Constant and Klaus F. Zimmermann 2013
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or
otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA

A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2012955223
This book is available electronically in the ElgarOnline.com
Economics Subject Collection, E-ISBN 978 1 78254 607 8

ISBN 978 1 84542 629 3

01

Typeset by Servis Filmsetting Ltd, Stockport, Cheshire
Printed and bound in Great Britain by T.J. International Ltd, Padstow

Contents
vii

List of contributors
Frontier issues in migration research
Amelie F. Constant and Klaus F. Zimmermann

1

PART I  INTRODUCTION
  1 Migration and ethnicity: an introduction

Amelie F. Constant and Klaus F. Zimmermann

13

PART II  THE MOVE
  2

  3

  4

  5

  6

Modeling individual migration decisions
John Kennan and James R. Walker
The economics of circular migration
Amelie F. Constant, Olga Nottmeyer and Klaus F. Zimmermann
The international migration of health professionals
Michel Grignon, Yaw Owusu and Arthur Sweetman
Independent child labor migrants
Eric V. Edmonds and Maheshwor Shrestha
Human smuggling
Guido Friebel and Sergei Guriev

39
55
75
98
121

PART III  PERFORMANCE AND THE LABOR MARKET
  7

  8

  9

10

11

12

13


Labor mobility in an enlarged European Union
Martin Kahanec
Minority and immigrant entrepreneurs: access to financial capital
Robert W. Fairlie
Migrant educational mismatch and the labor market
Matloob Piracha and Florin Vadean
Ethnic hiring
David Neumark
Immigrants in risky occupations
Pia M. Orrenius and Madeline Zavodny
Occupational sorting of ethnic groups
Krishna Patel, Yevgeniya Savchenko and Francis Vella
Immigrants, wages and obesity: the weight of the evidence
Susan L. Averett, Laura M. Argys and Jennifer L. Kohn

v

137
153
176
193
214
227
242


vi   Contents

PART IV  NEW LINES OF RESEARCH
14 Immigrants, ethnic identities and the nation-­state

Amelie F. Constant and Klaus F. Zimmermann
15 Interethnic marriages and their economic effects

Delia Furtado and Stephen J. Trejo
16 The impact of migration on family left behind

Francisca M. Antman
17 Natural disasters and migration

Ariel R. Belasen and Solomon W. Polachek
18Immigration–religiosity intersections at the two sides of the Atlantic:
Europe and the United States

Teresa García-­Muñoz and Shoshana Neuman
19 Immigration and crime

Brian Bell and Stephen Machin
20 Immigrants’ time use: a survey of methods and evidence

David C. Ribar
21 Happiness and migration

Nicole B. Simpson

259
276
293

309
331
353
373
393

PART V  POLICY ISSUES
22

23

24

25

26

27

28


Frontier issues of the political economy of migration
Gil S. Epstein
Skill-­based immigrant selection and labor market outcomes by visa category
Abdurrahman Aydemir
Refugee and asylum migration
Timothy J. Hatton
The economics of immigrant citizenship ascension
Don J. DeVoretz

Welfare migration
Corrado Giulietti and Jackline Wahba
Diaspora resources and policies
Sonia Plaza
The evaluation of immigration policies
Ulf Rinne

Name index
Subject index

411
432
453
470
489
505
530
553
561


Contributors
Francisca M. Antman  University of Colorado at Boulder, USA and Institute for the
Study of Labor (IZA), Bonn, Germany.
Laura M. Argys  University of Colorado Denver, USA and Institute for the Study of
Labor (IZA), Bonn, Germany.
Susan L. Averett  Lafayette College, USA and Institute for the Study of Labor (IZA),
Bonn, Germany.
Abdurrahman Aydemir  Sabanci University, Turkey and Institute for the Study of
Labor (IZA), Bonn, Germany.

Ariel R. Belasen  Southern Illinois University Edwardsville, USA.
Brian Bell  Department of Economics, University of Oxford and Centre for Economic
Performance, London School of Economics, UK.
Amelie F. Constant  George Washington University and Temple University, USA and
Institute for the Study of Labor (IZA), Bonn, Germany.
Don J. DeVoretz  Simon Fraser University, Canada and Institute for the Study of
Labor (IZA), Bonn, Germany.
Eric V. Edmonds  Dartmouth College, USA and Institute for the Study of Labor (IZA),
Bonn, Germany.
Gil S. Epstein  Department of Economics, Bar-­Ilan University, Israel and Institute for
the Study of Labor (IZA), Bonn, Germany.
Robert W. Fairlie  University of California, Santa Cruz, USA and Institute for the
Study of Labor (IZA), Bonn, Germany.
Guido Friebel  Goethe University Frankfurt, Germany, Centre for Economic Policy
Research (CEPR), UK and Institute for the Study of Labor (IZA), Bonn, Germany.
Delia Furtado  University of Connecticut, USA and Institute for the Study of Labor
(IZA), Bonn, Germany.
Teresa García-­Muñoz  University of Granada, Spain.
Corrado Giulietti  Institute for the Study of Labor (IZA), Bonn, Germany.
Michel Grignon  McMaster University, Hamilton, ON, Canada.
Sergei Guriev  New Economic School Moscow, Russia and Centre for Economic Policy
Research (CEPR), UK.
Timothy J. Hatton  University of Essex, UK and Australian National University,
Australia and Institute for the Study of Labor (IZA), Bonn, Germany.
vii


viii   Contributors
Martin Kahanec  Central European University, Hungary, Institute for the Study of
Labor (IZA), Bonn, Germany and Central European Labour Studies Institute (CELSI),

Slovakia.
John Kennan  University of Wisconsin-­Madison, USA, NBER, USA and Institute for
the Study of Labor (IZA), Bonn, Germany.
Jennifer L. Kohn  Drew University, USA.
Stephen Machin  Department of Economics, University College London and Centre for
Economic Performance, London School of Economics, UK and Institute for the Study
of Labor (IZA), Bonn, Germany.
Shoshana Neuman  Bar-­Ilan University, Israel, Institute for the Study of Labor (IZA),
Bonn, Germany and Centre for Economic Policy Research (CEPR), UK.
David Neumark  UCI Department of Economics and Center for Economics and Public
Policy, NBER, USA and Institute for the Study of Labor (IZA), Bonn, Germany.
Olga Nottmeyer  Institute for the Study of Labor (IZA), Bonn, Germany.
Pia M. Orrenius  Federal Reserve Bank of Dallas, USA and Institute for the Study of
Labor (IZA), Bonn, Germany.
Yaw Owusu  McMaster University, Hamilton, ON, Canada.
Krishna Patel  Federal Deposit Insurance Corporation, Division of Insurance and
Research, USA.
Matloob Piracha  University of Kent, UK and Institute for the Study of Labor (IZA),
Bonn, Germany.
Sonia Plaza  World Bank and Institute for the Study of Labor (IZA), Bonn, Germany.
Solomon W. Polachek  State University of New York at Binghamton, USA and
Institute for the Study of Labor (IZA), Bonn, Germany.
David C. Ribar  University of North Carolina at Greensboro, USA and Institute for the
Study of Labor (IZA), Bonn, Germany.
Ulf Rinne  Institute for the Study of Labor (IZA), Bonn, Germany.
Yevgeniya Savchenko  Georgetown University, USA.
Maheshwor Shrestha  Massachusetts Institute of Technology, USA.
Nicole B. Simpson  Colgate University, USA and Institute for the Study of Labor
(IZA), Bonn, Germany.
Arthur Sweetman  McMaster University, Hamilton, ON, Canada and Institute for the

Study of Labor (IZA), Bonn, Germany.
Stephen J. Trejo  The University of Texas at Austin, USA and Institute for the Study of
Labor (IZA), Bonn, Germany.
Florin Vadean  University of Kent, UK.


Contributors  ­ix
Francis Vella  Georgetown University, USA and Institute for the Study of Labor
(IZA), Bonn, Germany.
Jackline Wahba  University of Southampton, UK and Institute for the Study of Labor
(IZA), Bonn, Germany.
James R. Walker  University of Wisconsin-­Madison, NBER, USA and Institute for the
Study of Labor (IZA), Bonn, Germany.
Madeline Zavodny  Agnes Scott College, USA and Institute for the Study of Labor
(IZA), Bonn, Germany.
Klaus F. Zimmermann  Institute for the Study of Labor (IZA) and Bonn University,
Bonn, Germany.



Frontier issues in migration research

Amelie F. Constant and Klaus F. Zimmermann

With the inescapable progress of globalization, labor markets are bound to become more
integrated. The impending demographic disruptions will set in with full force in many
countries within the coming years. Climate change, natural disasters and the rise of the
BIC countries (Brazil, India, China) will pose additional labor market challenges. Ethnic
diversity will continue to gain importance – as both an opportunity and a threat. All of
these will eventually require a global reallocation of resources, which will force international and domestic labor markets to undergo major adjustment processes. The strong

demand for skilled workers along with the fight against extreme economic inequality,
the creation of ‘good’ jobs, and the increased employment of specific groups such as
the young, older, female, low-­skilled and ethnic minority workers will need scientific
monitoring and evaluation, in order to initiate necessary adjustment processes and labor
market programs in time.
Therefore, migration economics is a fast-­growing and exciting research area with very
significant and rising policy relevance. While its scope is extending persistently, there
is no adequate authoritative treatment of its various branches in one volume. The new
International Handbook on the Economics of Migration (IHEM) goes beyond providing
basic information on migration. It offers the latest experiences on migration research
and tackles frontier issues in the field. It provides comprehensive guidance to economics
scholars, inquiring researchers, students of migration and policy advisers. This handbook is a carefully commissioned and refereed compilation of 28 state-­of-­the-­art chapters of research in the economics of migration written by 44 leading experts in the field
together with this introduction. Well-­written and simply explained, each chapter comprises a critical assessment of the status quo and provides challenges to the traditional
economics of migration by dealing also with taboo topics.
The IHEM systematically and tactically covers all relevant frontier issues on migration. It deals with innovations in the modeling of migration, with the determinants of
migration such as natural disasters, refugee and asylum seeking, and the welfare magnet,
including child labor migration, human smuggling, the international move of health professionals and labor mobility in the enlarged European Union. Other chapters study the
consequences of migration for happiness, obesity, religiosity, crime, citizenship ascension, ethnic hiring, employment in risky occupations, occupational sorting and migrant
educational mismatch. The IHEM also covers the economic reflections and empirical
findings on ethnicity and integration, such as immigrant entrepreneurship, inter-­ethnic
marriages and immigrants’ time use. Lastly, the IHEM tackles specific issues of policy
relevance such as the impact of migration on the family left behind, immigrant selection
by visa category, circular migration, diaspora policies, evaluation techniques for migration policies and the political economy of migration.
The IHEM is structured in five parts: ‘Part I: Introduction’, ‘Part II: The move’, ‘Part
III: Performance and the labor market’, ‘Part IV: New lines of research’ and, finally,
1


2   International handbook on the economics of migration
‘Part V: Policy issues’. Following this introduction, some core knowledge of migration

research is presented in the chapter by Amelie F. Constant and Klaus F. Zimmermann
on ‘Migration and ethnicity: an introduction’. This chapter deals with the economic and
ethnic diversity caused by international labor migration, and their economic integration possibilities. It brings together three strands of literature dealing with the neoclassical economic assimilation, ethnic identities and attitudes towards immigrants and
the natives, and provides analysis to understand their interactions. The issue of how
immigrants fare in the host country, especially in terms of their labor force participation and remuneration, has been the core of research in the labor migration literature.
If immigrants fare as well as the natives, then they are economically assimilated. While
some immigrant groups do, most do not, especially in Europe. Of equal importance is
how immigrants identify with the culture of their home and host countries, and if natives
and immigrants have the right attitudes about each other. Ethnic identities and attitudes
seem to be less affected by the economic environment but have implications for economic performance.
‘Part II: The move’ deals with the migration decision and migratory flows. The first
chapter by John Kennan and James R. Walker on ‘Modeling individual migration decisions’ sets the stage for modeling the migration decision. It summarizes recent research
that formulates life-­cycle models of migration which are estimated using longitudinal
data. These models consider multiple destinations and multiple periods. The framework
offers a unified view applicable to internal and international migration flows. However,
data limitations severely hinder studies of international migration. As is common in
modeling life-­cycle decision-making, strong assumptions are imposed. Yet, most critical assumptions are empirically testable. The primary advantage is that these models
offer an interpretable economic framework for evaluating policy alternatives and other
counterfactual thought–experiments that offer insight on behavioral determinants and
tools for improved policy-­making. The second chapter by Amelie F. Constant, Olga
Nottmeyer and Klaus F. Zimmermann deals with ‘The economics of circular migration’,
an issue that has generated keen interest by researchers and policy-­makers alike. For too
long, migratory movements have been considered to be mostly permanent, an evaluation that has never been right and is increasingly accepted as an incorrect description
of labor migration. Temporary, return, repeat or circular migration have become the
keywords of the new migration research. This type of migration presents more challenges
for modeling and predicting migration patterns, as well as for migration policies. The
chapter presents a review of the empirical evidence, outlines implications for policy and
summarizes the policies to manage circular migration.
Given the rising scarcity of skilled workers, skilled migration receives much more
attention. The chapter by Michel Grignon, Yaw Owusu and Arthur Sweetman on ‘The

international migration of health professionals’ is, therefore, particularly timely. Health
workforce shortages in developed countries are perceived to be central drivers of the
health professionals’ international migration, one ramification being negative impacts
on developing nations’ health-­care delivery. After a descriptive international overview,
the authors discuss selected economic issues for both developed and developing countries. Health labor markets’ unique characteristics imply great complexity in developed
economies involving government intervention, licensure, regulation and (quasi-­)union
activity. These features affect migrants’ decisions and their economic integration, and


Frontier issues in migration research  ­3
impact on the receiving nations’ health workforce and society. Developing countries
sometimes educate citizens in expectation of emigration, while others pursue international treaties in attempts to manage migrant flows.
The next two chapters consider the dark side of migratory moves and deal with
child labor migration and human smuggling. The chapter by Eric V. Edmonds and
Maheshwor Shrestha investigates the situation of ‘Independent child labor migrants’.
Children living and working away from home are the most vulnerable in our societies. Parents, family, friends and home communities offer protection that can reduce
a child’s susceptibility to abuse and exploitation, as well as alleviate the consequences
of bad or poorly informed decisions. This chapter reviews the nascent literature
on the prevalence, causes and consequences of independent child labor migration.
Measurement challenges have constrained progress in understanding this phenomenon. There is considerable scope for future research to transform how we think
about issues related to the millions of children living and working away from their
parents. Guido Friebel and Sergei Guriev undertake the complex and thorny case
of migration, that of ‘Human smuggling’. Despite its importance and prevalence in
global illegal migration, there is little – and mostly theoretical – research on human
smuggling. The authors suggest an analytical framework to understand the micro
structure of the human smuggling market. Migrants interact with smuggling and
financing intermediaries, who may or may not be integrated with each other, and with
the migrants’ employers. Migration policies in the receiving countries such as border
controls, employer sanctions, deportation policies and sales of visas strongly affect the
interactions in the smuggling market and, hence, migration flows and the surfacing

of illegal immigrants. The chapter reviews the theoretical work, points to the scarce
empirical evidence, and identifies challenges for future theoretical, empirical work and
policy advice.
‘Part III: Performance and the labor market’ contains seven chapters covering
migrant and minority performance and the labor market consequences of mobility. In
the first chapter, Martin Kahanec presents a landmark labor migration in the European
history. ‘Labor mobility in an enlarged European Union’ is about the 2004 and 2007
enlargements of the European Union (EU) that extended the freedom of movement
to workers from the 12 new member states mainly from central eastern Europe. This
chapter summarizes and comparatively evaluates what we know about mobility in an
enlarged Europe to date. The pre-­enlargement fears of free labor mobility proved to be
unjustified. No significant detrimental effects on the receiving countries’ labor markets
have been documented, nor has there been any welfare shopping. Rather, there appear
to be positive effects on the EU’s productivity. While the sending countries face some
risks of losing their young and skilled labor force, they have also been relieved of some
redundant or idle labor and associated fiscal burdens, as well as having profited from
remittances sent back by migrants. Of key importance for the sending countries is to reap
the benefits from brain gain and brain circulation in the enlarged EU. For the migrants
the benefits in terms of better career prospects have, with little doubt, exceeded any
pecuniary and non-­pecuniary costs of migration. Consequently, the freedom of labor
movement in the EU provided for a triple-­win situation for the receiving and sending
countries as well as for migrants themselves.
Self-­employment is viewed as a key strategy to survive economically and even


4   International handbook on the economics of migration
f­ lourish for migrants and minorities. Robert W. Fairlie’s chapter deals with ‘Minority
and immigrant entrepreneurs: access to financial capital’. Reviewing existing research,
the author indicates that inadequate access to financial capital, partly owing to wealth
inequality, restricts the creation and growth of minority-­owned businesses. Access to

financial capital is thus essential for entrepreneurial success. There is less evidence on
access to financial capital among immigrant-­owned businesses. New estimates from
the US Census Bureau indicate that immigrant-­owned businesses start with higher
levels of capital than non-­immigrant owned businesses. The most common source of
start-­up capital for immigrant firms is from personal or family savings, which is similar
for ­non-­immigrant firms. Immigrants have relatively low rates of home ownership,
however, which may partly limit business formation. The next chapter, by Matloob
Piracha and Florin Vadean, investigates ‘Migrant educational mismatch and the labor
market’. This chapter reviews the literature on the educational mismatch of immigrants
in the host country labor market. It draws on the theoretical arguments postulated in the
labor economics literature and discusses their extension in the analysis of the causes and
effects of immigrants’ educational mismatch in the destination country. The authors
also present relevant empirical approaches, which show that immigrants are in general
more over-­educated than natives and the reasons for these findings range from imperfect transferability of human capital to discrimination to perhaps lack of innate ability.
Lastly, they assess the state of current literature and propose an agenda for further
research.
The chapter on ‘Ethnic hiring’ by David Neumark deals with discrimination, spatial
mismatch and networks which may pose barriers to employment. Widespread evidence
of ethnic discrimination from audit or correspondence studies may be questionable
because these studies may not identify discrimination. Application of a new method
that ­identifies discrimination is needed to reassess this evidence. Recent evidence discounts spatial mismatch as an important contributor to the low employment of minorities in the USA; living in an area with many jobs does not help minorities if these jobs
are held by other groups. Ethnically stratified networks may explain this evidence,
although ethnic networks may also help minorities connect to labor markets. Pia M.
Orrenius and Madeline Zavodny follow with their study ‘Immigrants in risky occupations’. The chapter reviews the economics literature on immigrant–native differentials
in occupational risk. It begins by briefly explaining the theory of compensating wage
differentials, and then provides a more detailed discussion of the empirical evidence on
the subject, which reaches several conclusions. First, immigrants are overrepresented
in occupations and industries with higher injury and fatality rates. Second, immigrants
have higher work-­related injury and fatality rates in some advanced economies, but
not in all. Finally, most, but not all, immigrants appear to earn risk premiums similar

to natives for working in risky jobs. The chapter closes with a discussion of areas
where additional research is needed. ‘Occupational sorting of ethnic groups’ is the next
chapter, by Krishna Patel, Yevgeniya Savchenko and Francis Vella. The chapter discusses research on immigrant occupational sorting in the destination country, and how
immigrant occupational outcomes depend on both the demand for skill and the supply
of immigrant skill. On the demand side, immigration policies in the destination countries
affect the degree to which immigrants are suitably matched in their occupation. On the
supply side, immigrant occupational sorting depends on factors such as experience in the


Frontier issues in migration research  ­5
home country and the skill transferability in the country of relocation. Social networks
also play an important role in the job search and matching process for immigrants, and
­influence their occupational placement.
The final chapter in Part III is on ‘Immigrants, wages and obesity: the weight of the
evidence’ written by Susan L. Averett, Laura M. Argys and Jennifer L. Kohn. In this
novel study the authors integrate disparate literatures on the effect of immigration on
obesity and the effect of obesity on labor market outcomes. Their review finds support
for the ‘healthy immigrant’ hypothesis: immigrants are less likely to be obese, but
obesity increases with duration in their new home. There is conflicting evidence on the
causal effect of obesity on labor market outcomes for immigrants and non-­immigrants
alike. Only two existing studies examine the dual effects of immigration and obesity.
Researchers need more complete data to address endogeneity concerns and assess the
causal effects of immigration and obesity on labor market outcomes.
Part IV of the handbook deals with ‘New lines of research’. The first chapter by Amelie
F. Constant and Klaus F. Zimmermann deals with ‘Immigrants, ethnic identities and
the nation-­state’. Concepts of individual and group identities have become increasingly
relevant in economics following the pace of other disciplines. Migrants, minorities and
natives have their own identity which differs from their national identities. The chapter
outlines the non-­economic roots of ethnic and national identities, and discusses the relationship with religious and social identities. The authors introduce a model of identity
formation and review the empirical findings concerning ethnic identity formation. They

then present and discuss the available data and the results of the relevant literature for
several countries. The second chapter by Delia Furtado and Stephen J. Trejo reviews
‘Interethnic marriages and their economic effects’. Immigrants who marry outside of
their ethnicity tend to have better economic outcomes than those who marry within
their ethnicity. It is difficult, however, to interpret this relationship because individuals
with stronger preferences for ethnic endogamy are likely to differ in unobserved ways
from those with weaker preferences. To clarify some of the complex issues surrounding
inter-­ethnic marriages and assimilation, this chapter starts by considering the determinants of intermarriage. It proceeds with an examination of the economic consequences
of intermarriage, and ends with a discussion of the links between intermarriage, ethnic
identification and measurement of long-­term socio-­economic integration.
Francisca M. Antman undertakes the study of the often forgotten family of the
migrant in the home country. ‘The impact of migration on family left behind’ addresses
the effects of migration on families left behind and offers new evidence on the impact
of migration on elderly parents. After discussing the identification issues involved in
the estimation, the chapter reviews the literature on the effects of migration on the education and health of non-­migrant children as well as the labor supply of non-­migrant
spouses. Finally, it discusses the impact of adult child migration on contributions
toward non-­migrant parents as well as on the effects on parental health. Results show
that elderly parents receive lower time contributions from all of their children when one
child migrates. In their chapter, ‘Natural disasters and migration’, Ariel R. Belasen and
Solomon W. Polachek make a case about the intrinsic link between man and the environment. Since the dawn of civilization man has battled with environmental disasters, from
massive hurricanes and tsunamis to slow, yet persistent, soil erosion and climate change.
When the environment wins, thousands are displaced and forced to emigrate from their


6   International handbook on the economics of migration
homes. The chapter presents a three-­pronged approach examining the impact of environmental disasters on migration: first, a literature survey; second, a meta-­analysis based on
this literature, and third, it puts forward new techniques isolating the marginal impact of
disasters on migration. The chapter finds stronger impacts in developing countries, particularly contingent upon whether the affected populace is in an urban or rural setting.
The chapter by Teresa García-­Muñoz and Shoshana Neuman investigates
‘Immigration–religiosity intersections at the two sides of the Atlantic: Europe and the

United States’. In this avant-­garde chapter, they explore the intertwined relationship
between immigration and religiosity in Europe and the USA. Starting with (1) the
current religious landscape and projections for the future, they continue with (2) the
religiosity of immigrants compared to natives, and they move on with (3) the religiosity
of immigrants and their integration; the relevant question being, is religiosity a ‘bridge’
or a ‘buffer’? The authors lastly compare the two continents of Europe and the USA.
The main conclusions are that: immigrants are indeed more religious than the local
­populations, leading to major changes in the future religious landscapes; and while in the
USA the religiosity of immigrants serves as a ‘bridge’, in Europe it has mainly the function of a ‘buffer’. Brian Bell and Stephen Machin provide in the chapter on ‘Immigration
and crime’ a highly politicized link. The authors examine first the economic literature
on the links between immigration and crime. In spite of popular concern, there is only
a sparse literature on the topic. After discussing some simple predictions from an economics of crime model, they review the extant empirical evidence. While causal effects
are difficult to identify, the evidence points to the importance of focusing on the labor
market attachment and earnings opportunities of different immigrant groups. Those
groups that are disadvantaged across this dimension tend to be associated with rises in
property crime. There appears to be no significant links between immigrants and violent
crime.
David C. Ribar authors another frontier chapter about ‘Immigrants’ time use: a
survey of methods and evidence’. This chapter discusses research questions related to
immigrants’ time use, reviews conceptual and methodological approaches to examining time allocations, and reviews evidence from previous studies. Using time-­diary data
from the American Time Use Survey, the chapter also provides new descriptive evidence.
While results vary with the country of origin, immigrant men in the USA tend to devote
more time to market work and sleeping; they allocate less time to housework, community activities and leisure than native men. Immigrant women tend to devote more time
to housework, care-­giving and sleep, but less time to market work, community activities and leisure than native women. The last of the cutting-­edge chapters in this part is
‘Happiness and migration’ by Nicole B. Simpson. This chapter explores the various
channels in which happiness and migration are related. Happiness may be important
in the decision to migrate, but migration may also affect happiness, and specifically the
happiness of the migrants, the natives in the destination and non-­migrants back home.
Existing literature indicates that migration increases the happiness of the migrants but
migrants are generally less happy than natives in the destination. There is considerable

heterogeneity documented in the happiness of migrants across origin and destination
countries and in migration duration. Despite a recent surge in work on the topic, several
unexplored areas of research remain.
‘Part V: Policy issues’ of the handbook starts with the chapter on ‘Frontier issues of


Frontier issues in migration research  ­7
the political economy of migration’ written by Gil S. Epstein. Migration has a strong
economic impact on the sending and host countries. Since individuals and groups do
not benefit equally from migration, interest groups emerge to protect and take care of
their narrow self-­interests and compete for rents generated by migration. Narrow self-­
interests may be present not only for interest groups but also for ruling politicians and
civil servants. This chapter considers how political culture is important for determining
policy and how interest groups affect, via a lobbying process, the choice of public policy.
The chapter lastly analyzes how interest groups and lobbying activities affect assimilation and attitudes towards migrants and international trade. The narrow interests of the
different groups may cause a decrease in social welfare, in some cases, and may enhance
welfare in other situations.
Immigrant selection, political migration and citizenship ascension are the topics of
the next three chapters dealing with significant policy issues. Attracting skilled immigrants is emerging as an important policy goal for immigrant receiving countries. In his
chapter ‘Skill-­based immigrant selection and labor market outcomes by visa category’
Abdurrahman Aydemir first discusses the economic rationale for immigrant selection.
The author reviews selection mechanisms of the receiving countries in the context of
deteriorating labor market outcomes for immigrants across destination countries which
fuels the debate on selection. Next, he discusses the variation in immigrant characteristics across countries and visa types. Lastly, he reviews the evidence on labor market
outcomes of immigrants by visa category that portrays the experiences of countries with
different selection mechanisms. He concludes by underlining the challenges for realizing
aimed benefits of a skill-­based immigrant selection policy. Timothy J. Hatton deals with
another hot migration topic, ‘Refugee and asylum migration’. He provides an overview
of asylum migration from poor strife-­prone countries to the Organisation for Economic
Co-­operation and Development (OECD) since the 1950s and examines the political

and economic factors in source countries that generate refugees and asylum seekers.
Particular attention is given to the rising trend of asylum applications up to the 1990s,
and the policy backlash that followed. The chapter then considers the political economy
of restrictive asylum policies, especially in EU countries, as well as the effectiveness of
those policies in deterring asylum seekers. It concludes with an outline of the assimilation of refugees in host country labor markets. ‘The economics of immigrant citizenship
ascension’ by Don J. DeVoretz observes that naturalized immigrants often receive an
earnings premium after obtaining citizenship. It is argued that the size of this ‘citizenship
premium’ varies across immigrant receiving countries and the immigrants themselves; in
conjunction with the cost of obtaining citizenship this premium determines the differential rates of citizenship ascension. The size of the premium obtained by ‘Old World and
New World’ naturalized immigrants is a consequence of positive discrimination in the
labor market for naturalized immigrants and a by-­product of their human capital accumulation prior to citizenship ascension. The largest economic premium from naturalization accrues under a ‘triple selection’ regime where economic immigrants self-­select on
an economic basis to migrate to a country with stringent economic entry and ­citizenship
acquisition criteria.
The chapter on ‘Welfare migration’ by Corrado Giulietti and Jackline Wahba
reviews and discusses major theories and empirical studies about the welfare magnet
hypothesis, that is, whether immigrants are more likely to move to countries with


8   International handbook on the economics of migration
generous welfare systems. Although economic theory predicts that welfare generosity
affects the number, composition and location of immigrants, the empirical evidence is
rather mixed. The chapter offers explanations for the existence of such mixed evidence
and highlights that the literature so far has overlooked the presence of different migration regimes, as well as the possibility of reverse causality between welfare spending and
immigration. Sonia Plaza further studies ‘Diaspora resources and policies’ suggesting
that migration presents significant untapped potential for development. Globalization
makes it possible for immigrants to remain connected with their native countries while
residing abroad, thus diminishing their loss of identity and separation from their countries of origin. The contribution of the diaspora goes beyond remittances and includes
promotion of trade, investments, knowledge and technology transfers. Diasporas
facilitate bilateral trade and investment flows between their country of residence and
their home country. Diaspora members can also act as catalysts for the development of

capital markets in their countries of origin by diversifying the investor base, by introducing new financial products and by providing reliable sources of funding, such as
diaspora bonds. Diasporas my also provide origin-­country firms access to technology
and skills. In recent years there has been a shift in the analysis of high-­skilled migration. Instead of viewing the emigration of skilled people as a loss, many economists
view it as an opportunity to increase trade, investment and technology flows. This
chapter covers a diverse range of diaspora issues and provides a number of analytical
and empirical results that are relevant for policy-­makers in both developed and developing countries.
Ulf Rinne provides a chapter on the under researched area ‘The evaluation of immigration policies’ summarizing the literature on the evaluation of immigration policies.
The chapter brings together two strands of the literature dealing with the evaluation of
labor market programs and with the economic integration of immigrants. Next to immigrant selection and settlement policies, there are four types of interventions that aim at
improving the economic and social outcomes of immigrants: (1) introduction programs,
(2) language training, (3) labor market programs, and (4) anti-­discrimination policies. The chapter discusses problems associated with the evaluation of such programs,
presents methodological approaches to circumvent these problems, and surveys empirical results and findings. It concludes with lessons from previous research and identifies
avenues for future research.
An endeavor such as a handbook cannot be successfully undertaken without the
devoted support of many people. This includes the 44 authors of the chapters and the
many experts who have provided excellent anonymous referee reports as well as editorial
support: Olivier Bargain, Brittany Bauer, Costanza Biavaschi, Marco Caliendo, John
Cawley, Nancy H. Chau, Deborah A. Cobb-­Clark, Amelie F. Constant, Horst Entorf,
René Fahr, Denis Fougère, Martin Guzi, Dan Hamermesh, Gaby Herbrig, Jasmin
Kantarevic, Annabelle Krause, Steffen Künn, Evelyn L. Lehrer, Marco Manacorda,
Kostas Mavromaras, David McKenzie, Olga Nottmeyer, Margard Ody, Ulf Rinne,
Regina T. Riphahn, Ralph Rotte, Sabrina Pabilonia, Maurice Schiff, Zahra Siddique,
Erdal Tekin, Bienvenue Tien, Marie-­Anne Valfort, Nicolas R. Ziebarth and Klaus F.
Zimmermann. The editorial work has been done at the various stages together and
alone at the premises of IZA, Bonn and DIW DC, Washington. The perfect working
conditions in both institutions provided us with the necessary environment and support


Frontier issues in migration research  ­9
to foster this project. Finally, we gratefully acknowledge all the encouragement and

support provided by the publisher, Edward Elgar, and his staff, including Alex Pettifer,
Alexandra O’Connell, Laura Seward and Caroline Cornish.



PART I
INTRODUCTION



1  Migration and ethnicity: an introduction*
Amelie F. Constant and Klaus F. Zimmermann

1  INTRODUCTION
Migration as ‘factor mobility’ and migrants as a ‘factor of production’ are of paramount
importance in economics. The different skills and education that are embodied in immigrants, while valuable in the production process, may not be appreciated by all members
of the host country. In addition, migrants as human beings are an integral part of the
human development in a society and a country. Yet, resistance to the spreading of diversity and concerns about the growth of the immigrant population from several groups
make immigrants feel unwanted. The imbroglio of migration touches and raises problems in the social, economic, political, cultural and religious spheres not only domestically, but also internationally. Migration scholars, pundits and policymakers alike are
deeply divided over the responsibilities and the best concepts for analyzing or solving the
issue of international migration.
The issue of how immigrants fare in the host country especially in terms of their labor
force participation and remuneration occupies the minds of social scientists, politicians
and the general public. Using the natives as the gold standard, immigrants have been
compared to them. If immigrants fare as well as the natives, then they are economically
assimilated. Of equal importance is the question of whether immigrants socialize and
mingle with the natives, if they feel comfortable in their new country or they create parallel societies, and if natives and immigrants have the right attitudes about each other.
Terms such as cultural or social assimilation, acculturation, integration, and so on, have
been used to capture and describe these concerns.
This chapter focuses on economic migrants, that is, individuals who leave their

country and loved ones to go abroad to a new country in search of job and other economic opportunities to better their and their children’s lives. We first review the economic status quo theories on immigrant performance dealing with what is sometimes
called economic assimilation: how do migrants become like natives in economic terms?
We then present recent advances in economics about the formation of ethnic identity
and its role in the economic and social spheres: how do identities shape and how are they
related to economic success? We finally discuss the importance of attitudes and perceptions in the integration process: are they affected by economic conditions and do they
influence economic performance? The chapter is designed as an introduction to the core
issues of migration research. We neither attempt to cover all relevant basic knowledge
nor do we discuss most of the recent advances in the field, which is the purpose of the
other chapters in this volume.

13


14   International handbook on the economics of migration

2  THE ECONOMICS OF ASSIMILATION
Starting with the pioneering work of Chiswick (1978) on the assimilation of immigrant
men in the United States (US), the overarching research that has preoccupied the
literature deals with the economic performance of immigrants relative to that of comparable natives. The literature is set within the Mincerian human capital framework,1
whereby immigration is perceived as an investment in human capital (Sjaastad, 1962),
the young and the better educated are more likely to migrate and migration yields higher
returns to the more able and the more highly motivated; assimilation is a labor market
phenomenon.2 The conjecture is that immigrants are rational individuals who want to
maximize their lifetime utility; they are a self-­selected group of individuals characterized
by a strong incentive to invest in human capital and have a ferocious drive to succeed in
the host country’s labor market. They have set preferences that they reveal in a rational
ranking order. Migrants with higher levels of human capital will command higher wages
in the labor market since investment in human capital raises productivity.
Chiswick’s (1978) hypothesis, as well as that of many others who followed his lead,
was that the earnings of newly arrived immigrants are significantly lower than those of

natives with the same observed socioeconomic characteristics, mainly because immigrants’ skills are not always or perfectly transferable to the host country’s labor market.
However, as immigrants gain information about the functioning of the new labor market
and invest in human capital in the new country, their earnings increase rapidly and
can reach and even exceed the earnings of natives. When the catching up of earnings
occurs, then economic assimilation is achieved, meaning that immigrants and natives are
­indistinguishable in terms of their earnings.
Therefore, assimilation is the rate at which the earnings of immigrants converge
to the earnings of comparable natives due to their accumulation of human capital in
the host country’s labor market with additional years of residence (Chiswick, 1978).3
Assimilation is attributed to the positive selection of immigrants, that is, their innate
ability, their high motivation for labor market success and their higher incentives to
invest in host country’s specific human capital. Indeed, this generation of studies4 found
that immigrant earnings reach parity with native earnings within 10 years of residence,
and after 10 years, immigrant earnings exceed the earnings of natives.
The main drawback of these studies was that the models were estimated based on a
single cross-­section of data that includes individuals from all ages. A new generation of
studies was ignited by Borjas’s (1985)5 seminal paper which questioned the empirical
validity of the above results from cross-­section data on the grounds that the assimilation effects were confounded with cohort effects. That is, based on one cross-­section, the
estimated earnings of immigrants of different ages are overstated if the quality of more
recent immigrant cohorts is lower than that of older cohorts. Borjas (1985) attempted to
estimate the selection bias which may contaminate cross-­sectional comparisons and to
establish a relationship between cohort quality and immigrant self-­selection.
Borjas’s contribution was to track the progress of a particular cohort over successive
waves of cross-­sectional data and to identify cohort and assimilation effects by creating
synthetic cohorts.6 Borjas and subsequent research suggested that immigrants in the US
were not necessarily positively selected. As a result, and despite the fact that earnings
increase with additional years of residence, immigrants may not assimilate as rapidly as