How Borrowing Constraints Hinder Migration: Theoretical Insights from a Random Utility Maximization Model

Léa Marchal () and Claire Naiditch

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Abstract: We provide a theoretical framework to analyze how financial constraints hinder migration. Introducing wealth heterogeneity and borrowing constraints into a random utility maximization model of migration, we find evidence of multilateral resistance to migration stemming from borrowing constraints. We calibrate the model on 22 European countries, and we show that omitting the constraints biases upward the estimation of bilateral migration rates. We then simulate an increase in the bilateral cost of migration to the United Kingdom. We find that omitting the constraints biases downward the change entailed by the cost increase in the bilateral rates of migration to all destinations.

Date: 2019
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Published in Scandinavian Journal of Economics, 2019, 122 (2), pp.732-761. ⟨10.1111/sjoe.12355⟩

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Journal Article: How Borrowing Constraints Hinder Migration: Theoretical Insights from a Random Utility Maximization Model (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02498160

DOI: 10.1111/sjoe.12355

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