Self-Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

58 Pages Posted: 19 Oct 2015 Last revised: 26 Feb 2023

See all articles by George J. Borjas

George J. Borjas

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Ilpo Kauppinen

Government of the Republic of Finland - VATT Institute for Economic Research

Panu Poutvaara

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; ifo Institut - Leibniz-Institut fuer Wirtschaftsforschung an der Universitaet Muenchen e.V.; CESifo (Center for Economic Studies and Ifo Institute); CReAM; IZA Institute of Labor Economics

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Date Written: October 2015

Abstract

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.

Suggested Citation

Borjas, George J. and Kauppinen, Ilpo and Poutvaara, Panu, Self-Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics (October 2015). NBER Working Paper No. w21649, Available at SSRN: https://ssrn.com/abstract=2675922

George J. Borjas (Contact Author)

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Ilpo Kauppinen

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Panu Poutvaara

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

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