A Real-Options Analysis of Climate Change and International Migration

Marius Braun ()
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Marius Braun: Justus Liebig University Giessen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: The potential impact of climate change on international migration patterns has recently received considerable attention in both the public and academic debate. Yet, much of the empirical literature fails to find increases in international migration due to climate change. The current paper attempts to resolve this “immobility paradox†by applying a real-options framework to the relationship between climate change and international migration. This framework suggests that individuals may postpone their migration response to climate change in the face of uncertainty and only migrate once impacts of climate change have exceeded certain thresholds. I test this prediction using semiparametric regression methods which allow me to empirically identify the threshold effects implied by the real-options framework. However, the findings are generally inconsistent with such threshold effects. Rather, the results suggest that in low-income countries, individuals’ migration response is hampered by the existence of liquidity constraints. These are likely to become more binding due to climate change-induced decreases in agricultural productivity.

Keywords: climate change; international migration; real-options; semiparametric methods (search for similar items in EconPapers)
JEL-codes: C14 F22 Q54 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021
New Economics Papers: this item is included in nep-env, nep-int and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202138

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