Migration - Rosen-Roback Framework Of Determinants Of Migration

Question 1

How many people are internal migrants

B) How does this compare to international migrants

Answer 1

1/8 are internal migrants

4x more internal than international migrants

Question 2

Wage gaps in rural vs urban areas

Answer 2

2.2x to 2.6x higher

Question 3

So surely just relocate from rural to urban areas,

A valid poverty alleviation strategy… So why are people not doing it? Why is internal migration low?

This is the main big picture question.

Question 4

What determines migration (4)

Answer 4

Wages
Cost of living (e.g housing, education, food)
Amenities (perks/disadvantages)
Migration costs (e.g losing friends)

Question 5

Rosen-Roback model of migration;

Migrate from origin o to destination d if:

Answer 5

waged - cost of livingd + amenitiesd - migration costod ≥ wageo +cost of livingo - amenitieso

Makes sense as even with migration cost, it should be at least greater than or equal to current state at O

Question 6

We saw urban 2.2-2.6x higher. What is a caveat to this result

Answer 6

Selection issue: wages could be higher in city because urban people more educated.

So simply relocating rural workers may not yield similar results.

Question 7

So what do we find from actual wage premium from migrating in Bangladesh (RCT and experimental)

Answer 7

RCT in Bangladesh found 9% wage premium

Experimental return: 36%

So not 2x higher (100%)

Question 8

However what do they find in Indonesia

Answer 8

Once adjusting for individual circumstances, the premium disappears (e.g once they start accounting for education etc)

So explains why people are not migrating; gains are not as high as perceived!

Question 9

What about when returns to migration when looking at countries overall

Answer 9

We can see gains in returns to migration from rural to urban

E.g China, 22.6% wage premium from rural to urban

Question 10

So that was 1 determinant of migration: wages

Now cost of living:

Wage gaps are said to usually survive cost-of-living adjustments, what does this mean

Answer 10

When factoring urban area prices being more expensive , still better off in Urban areas (after PPP-adjusted!)

Question 11

Cultural costs of migration: an example

Answer 11

Indian migrants pay a “caloric tax” - when moving from South (rice producing) to North (wheat producing), rice is more expensive, but they continue to demand

Question 12

3rd determinant of migration: Amenities

Can be positive or negative, examples

Answer 12

Pollution, congestion, crime

Finished floors, toilet facility, electricity, under 5 mortality

Question 13

Amenities and density relationship (Gollin)

Answer 13

Positive relationship - implies amenities (that are negative) do not explain the wage premium

Question 14

4th determinant: migration cost

2 types of migration costs

Answer 14

Financial - e.g relocation costs

Utility: miss family etc

Question 15

Example of high financial migration cost in China

Example of low financial migration cost in Brazil

Answer 15

You can only receive public goods e.g health, education if where you are registered in that area

Thus for migrants that move are not registered, it means they have to pay for those goods I.e increase financial costs of migration!!

B) building more roads reduced relocation costs, increasing migration!