DP1540 | Where do Migrants Go? Risk-Aversion, Mobility Costs and the Locational Choice of Migrants

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As part of their effort to pool individual risk, households consider spreading their members over a plurality of locations, both inside and outside their country of origin. At the same time, the world is ridden with ?Chinatowns? and ?Little Italies?: people, whenever they move, tend to bunch in the same location. Bunching would appear fundamentally at odds with the desire to diversify risk. In this paper we provide a framework to reconcile both spatial bunching and the spread of migrants, combining risk-aversion and concavity of mobility costs at the household level. Evidence from Southern Italy is consistent with the main predictions from our model.