Self-Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics
We show that the Roy model has more precise predictions about the self-selection of migrants than previously realized. The same conditions that have been shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non-migrants. We use the Danish full population administrative data to test the predictions. We find strong evidence of positive self-selection of emigrants in terms of pre-emigration earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non-migrants. This result is not driven by immigration policies in destination countries. Decomposing the self-selection in total earnings into self-selection in observable characteristics and self-selection in unobservable characteristics reveals that unobserved abilities play the dominant role.
We thank participants at Norface Migration Network Conference, Journées Louis-André Gérard-Varet, EEA and CEMIR Junior Economist Workshop in 2013, the Alpine Population Conference, UCFS Workshop, CESifo ESP area conference and VfS annual conference in 2015 and seminars at UC Irvine, ETH Zurich, Labour Institute for Economic Research, VATT, University of Linz, and University of Salzburg for valuable comments. Financial support from Leibniz Association (SAW-2012-ifo-3) is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
George J Borjas & Ilpo Kauppinen & Panu Poutvaara, 2019. "Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics," The Economic Journal, vol 129(617), pages 143-171. citation courtesy of