As the size of networks increases over time, finding employment becomes less uncertain, inducing more risk-averse individuals to migrate. Given that recent research suggests a negative relationship between risk aversion, entrepreneurial potential and cognitive ability, the model predicts a decrease in the quality of these ‘unobservable’ characteristics as networks grow larger. In addition, the dynamic relationship between network size and uncertainty leads to the following hypotheses: when migrants are more reliant on networks for finding work, more individuals will migrate, they will migrate sooner and at a faster rate. I use German Socio-Economic Panel Study (SOEP) data to provide empirical support for the predictions of the theoretical model.
New paper on the effects of risk attitudes on the dynamics of migration
- 11 April 2012
Two central concerns for policy makers are the manageability of the rate of migration and the qualities of incoming migrants. This paper addresses these issues by proposing a theory that links risk aversion, the size of expatriate networks, migrant characteristics and the timing of migration