International Migration with Heterogeneous Agents: Theory and Evidence for Germany, 1967–2009

31 Pages Posted: 18 Feb 2012

See all articles by Herbert Brücker

Herbert Brücker

German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Philipp J. H. Schröder

Aarhus University - School of Business and Social Sciences

Date Written: February 2012

Abstract

Temporary migration, though empirically relevant, is often ignored in formal models. This paper proposes a migration model with heterogeneous agents and persistent cross country income differentials that features temporary migration. In equilibrium there exists a positive relation between the stock of migrants and the income differential, while the net migration flow becomes zero. Consequently, existing empirical migration models, estimating net migration flows, instead of stocks, may be misspecified. This suspicion appears to be confirmed by our investigation of the cointegration relationships of German migration stocks and flows since 1967. We find that (i) panel‐unit root tests reject the hypothesis that migration flows and the explanatory variables are integrated of the same order, while migration stocks and the explanatory variables are all I(1) variables, and (ii) the hypothesis of cointegration cannot be rejected for the stock model.

Suggested Citation

Brücker, Herbert and Schröder, Philipp J. H., International Migration with Heterogeneous Agents: Theory and Evidence for Germany, 1967–2009 (February 2012). The World Economy, Vol. 35, Issue 2, pp. 152-182, 2012, Available at SSRN: https://ssrn.com/abstract=2007374 or http://dx.doi.org/10.1111/j.1467-9701.2011.01426.x

Herbert Brücker (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Philipp J. H. Schröder

Aarhus University - School of Business and Social Sciences ( email )

Haslegaardsvej 10
DK-8210 Aarhus, 8210
Denmark

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