The Role of Community in Migration Dynamics

26 Pages Posted: 18 Jan 2006

See all articles by Sergio Vergalli

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Multiple version iconThere are 2 versions of this paper

Date Written: January 2006


In this paper, we present a theoretical model that, implementing the pioneering work of Burda (1995), based on the Real Option Theory, investigates the roots of the migration dynamics. In the model the decision to migrate of each individual depends not only on the wage differential, but also on a U-shaped benefit function of a community of homogeneous ethnic individuals, modelled according to the "theory of clubs". The theoretical results are able to give an explanation to the observable "jumps" in the migration flows and to describe how the trigger for entry can change depending on the dimension of the district. The analysis of the results also sheds light on the dynamics of the districts' development: some possible rigidities in the adjustment of the district dimension, as regards the optimal levels, could magnify the hysteresis process.

Keywords: Migration, Real option, Theory of clubs, Network effect

JEL Classification: F22, H49, O15, R23

Suggested Citation

Vergalli, Sergio, The Role of Community in Migration Dynamics (January 2006). FEEM Working Paper No. 4.2006, Available at SSRN: or

Sergio Vergalli (Contact Author)

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan

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