Do Migrants Follow Market Potentials? An Estimation of a New Economic Geography Model

Matthieu Crozet

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Abstract: New Economic Geography models describe a cumulative process of spatial agglomeration: Firms tend to cluster in locations with good access to demand, and similarly, workers are drawn to regions where market potential is high because the price index is lower there. This paper provides an empirical assessment of this forward linkage that relates labour migrations to the geography of production through real wage differentials. In the spirit of Hanson (1998), we use bilateral migration data for five European countries over the 1980s and 1990s to perform quasi-structural estimations of a new economic geography model derived from Krugman (1991). The results show strong evidence in favor of this model. As expected, migrants do follow market potential. Moreover, we provide estimates for all key parameters of the model. These estimates suggest that a sudden emergence of a core-periphery pattern is unlikely within European countries: centripetal forces are too limited in geographical scope, and mobility costs are too high.

Keywords: Agglomeration; economic geography; European regions; migration.; migration (search for similar items in EconPapers)
Date: 2004-08
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00096277
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Citations: View citations in EconPapers (117)

Published in Journal of Economic Geography, 2004, 4 (4), pp.439-458

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Journal Article: Do migrants follow market potentials? An estimation of a new economic geography model (2004)
Working Paper: Do Migrants Follow Market Potentials? An Estimation of a New Economic Geography Model (2004)
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