'Self-Selection and Liquidity Constraints in Different Migration Cost Regimes'
2:00-5:00 p.m., Tuesday, March 16, 2010
Eleanor Roosevelt College Admin. Bldg.
Conference Room 115, First Floor
University of California, San Diego
http://ccis.ucsd.edu/2010/03/scott-b...-cost-regimes/
Speaker:
Scott Borger, Economist, Office of Immigration Statistics, U.S. Department of Homeland Security
Description: As smuggling costs across the U.S.-Mexico border have increased, a shift has occurred in the types of migrants able to afford the costs. Potential unauthorized migrants often face a liquidity constraint such that they cannot borrow against their future earnings to pay the cost for clandestine entry. In this paper I model the decision to migrate with this liquidity constraint and the ability for U.S. social networks to alleviate these constraints. The model predicts (i) an increase in smuggling fees intensifies intermediate self-selection of migrants, (ii) an increase in US wages increases migration among higher skill types, and (iii) social networks enable lower skill types to migrate. The predictions of the model are tested by estimating migration behavior in low-cost and high-cost migration periods. In the high-cost period relative to the low-cost period, I find evidence of an intensification of intermediate self-selection. Moreover, social networks increase migration among low-income earners in the high-cost period. In the model calibrated using U.S.-Mexico data, I find the smuggling fees are an important component of who migrates.