DP769 | Migration Theory and Evidence: An Assessment

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This paper presents a critical survey of theories of migration, their welfare and policy implications and their empirical relevance. We also develop some extensions to the theory beginning with a general encompassing model of migration which treats the Harris and Todaro (HT) model as a special case. In particular, we show how standard policy, a reduction of the wage gap between an advanced and a backward region to reduce the rate of migration, follows from the standard model, but ceases to be valid if borrowing constraints on the potential migrant are introduced. The HT model is extended to examine risk-averse behaviour within families where the migration of members of families serves to diversify risk. The welfare implications of the individual migration decision and government intervention in the form of employment subsidies are also examined.