Abstract
Increasing immigration into western countries over the last 25 years has re-kindled scholarly and political debates over the economic consequences of such immigration for the receiving countries. So far, research has come up with diverging empirical results. There seems, however, to be agreement on one point: the economic impact of immigration is strongly dependent on who the immigrants turn out to be. Thus, the skill-based sorting of immigrants into various host countries can be expected to be highly relevant. Borjas has proposed a sorting model in which the skill composition of migration depends on the second moments of the income distribution in the sending and the receiving countries, provided that skills and income are correlated in both. Previous empirical tests of this model have failed to turn up consistent results. Using data from the OECD Migration Database on the educational levels of immigrants from EU-15 countries into other EU-15 countries the paper shows that the skill-based sorting of this immigration is consistent with the core prediction from the Roy-Borjas model. This result also obtains after control for network (or herd) effects, which are often marshaled as alternative explanations of the locational decisions of immigrants.
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Helpful comments by George J. Borjas, Arye Hillman, Dennis Snower, and Oded Stark on earlier versions of this paper are gratefully acknowledged. Remaining errors are the sole responsibility of the author.
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Notes
- 1.
Borjas also considers the case of a low correlation between skills in the source and the host country (Borjas 1994: 1689, eq. 15).
- 2.
This reading of the model differs somewhat from Chiswick’s interpretation “… that immigrants from countries with greater inequality constitute the least able members of the origin labor force” (Chiswick 1999: 184).
- 3.
It should be noted, however, that Mayda (2005) is testing the impact of source and host country inequality on the size of immigration rates, whereas the Roy-Borjas model concerns the impact of source and host country income inequality on the skill composition of migration.
- 4.
The main restriction is that while citizens of an EU-15 country have the right to move to another EU-15 country and stay there for up to 6 months looking for work, they can only exercise that right if they are able to provide for themselves (and their families) in the host country. Also they can be repatriated if they lose their job in the host country and become dependent on public support.
- 5.
As will be discussed below, this type of “noise” cannot be eliminated completely, however. Also, the data used here may introduce other kinds of “noise” in the analysis.
- 6.
Borjas uses geographical distance as a proxy for migration costs, assuming migration costs to be proportional to geographical distance. He also assumes migration costs to be the same for all migrants.
- 7.
Even with several such cross-sectional data sets, each referring to different points in time, it would not be possible to construct data on the skill composition of immigration flows.
- 8.
There is no equivalent problem in using the distance between countries as a proxy for migration costs, as this variable is time invariant.
- 9.
Calculated using the distance calculator at http://www.mapcrow.info.
- 10.
Though Denmark and Sweden are separated by the Oeresund, they have been coded as having a common border.
- 11.
Source: http://www.infoplease.com/ipa/A0855611.html. When we classify pairs of countries with respect to whether or not they have a common language some arbitrariness can be hard to avoid. Obviously Austria and Germany or Ireland and the United Kingdom have a common language by all reasonable standards. Belgium has a common language with both France and the Netherlands, as both French and Dutch (of some kind) are spoken in Belgium. Denmark has been coded to have a common language with Sweden, even though Danish and Swedish differ in quite some respects. Nevertheless they are close enough for most Danes and Swedes to communicate with each other using their respective mother tongue. On the other hand Denmark is coded not to have a common language with Germany, even though there is a small German-speaking minority in Denmark and even though most Danes know at least some German.
- 12.
Source: see preceding note.
- 13.
Computed from Heston et al. (2002).
- 14.
This interpretation is supported by the fact that the percentage of low-skilled individuals among immigrants from one EU-15 country into another is positively related to the number of immigrants from the sending country living in the receiving country (r = 0.37).
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Nannestad, P. (2017). Where Have All the Flowers Gone? The Locational Choice of High-Skilled Immigrants Within the EU-15 Countries: Some Empirical Evidence on the Roy-Borjas Model. In: Christensen, B., Kowalczyk, C. (eds) Globalization. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-49502-5_15
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