International Migration as an investment
• Individuals will move if they can increase the present value of benefits by
greater that the costs of moving
1. Migration as an investment in human capital
• Costs
◦ Divided into direct(money) and indirect(non-money)costs
◦ Money costs
‣ Out of pocket expenses
‣ Increased expenditure on food lodging and transportation
◦ Non money
‣ Opportunity costs of migration
‣ Earning foregone while moving, searching for work or training for
the new Job
◦ Psychic costs of moving- reluctant to leave family behind
◦ However author wants to separate these costs and focus on the real
resource costs
• benefits
◦ Investment benefit- higher income in new country
◦ returns of migration represent a higher productivity
◦ Author when calculating the net present value of migration, accepts he
only bases it on real resource costs, however notes that the psychic
costs and benefits aren’t quantitative
◦
• Net present value of migration (NPVm) calculation
◦ NPVm = Discounted benefits - Discounted costs(resource + psychic)
◦ migration will be greater when:
‣ The greater the annual income differential (Ya-Yh), lower age allows
for a longer period over to which enjoy increased net earnings
‣ Smaller direct and indirect costs, young people will have fewer
possessions, less things to take across
‣ Smaller psychic costs, youngers have a less extensive network of
friends
• Implications
◦ it is young, more entrepreneurial , single individuals with no kids
that are likely to have a positive NPVm
◦ As long as there are large income inequalities between countries, the
pressure to migrate will be great
2. The economic consequences of migration
• 3 sets of individuals to consider when analysis consequences of migration:
◦ The migrants themselves
◦ individuals in the destination country (receiving)
◦ Individuals in the home country (origin)
• Taxonomy
• Individuals will move if they can increase the present value of benefits by
greater that the costs of moving
1. Migration as an investment in human capital
• Costs
◦ Divided into direct(money) and indirect(non-money)costs
◦ Money costs
‣ Out of pocket expenses
‣ Increased expenditure on food lodging and transportation
◦ Non money
‣ Opportunity costs of migration
‣ Earning foregone while moving, searching for work or training for
the new Job
◦ Psychic costs of moving- reluctant to leave family behind
◦ However author wants to separate these costs and focus on the real
resource costs
• benefits
◦ Investment benefit- higher income in new country
◦ returns of migration represent a higher productivity
◦ Author when calculating the net present value of migration, accepts he
only bases it on real resource costs, however notes that the psychic
costs and benefits aren’t quantitative
◦
• Net present value of migration (NPVm) calculation
◦ NPVm = Discounted benefits - Discounted costs(resource + psychic)
◦ migration will be greater when:
‣ The greater the annual income differential (Ya-Yh), lower age allows
for a longer period over to which enjoy increased net earnings
‣ Smaller direct and indirect costs, young people will have fewer
possessions, less things to take across
‣ Smaller psychic costs, youngers have a less extensive network of
friends
• Implications
◦ it is young, more entrepreneurial , single individuals with no kids
that are likely to have a positive NPVm
◦ As long as there are large income inequalities between countries, the
pressure to migrate will be great
2. The economic consequences of migration
• 3 sets of individuals to consider when analysis consequences of migration:
◦ The migrants themselves
◦ individuals in the destination country (receiving)
◦ Individuals in the home country (origin)
• Taxonomy
