Migration as a choice

Why do people move in the first place? To answer this question and explain international migration, the theory of neo-classical economics has been used extensively. Let us see together, what it says. According to this theory, at the macro level, migration between two countries occurs because of different features of their labour markets. In some countries, in fact, there is high demand for labour, while others have extra supply of labour. In countries with high demand, wages are higher. While in countries with extra supply, wages are lower. It is this difference that causes migration. At the micro level, the theory looks at the individual who chooses to migrate to find more and better employment opportunities and higher wages.

However, migrants have to overcome many economic and psychological obstacles. They need to pay for their travel. Learn a new language. Adapt to a new environment. And leave family and friends behind.

The decision to migrate is thus based on a calculation of foreseen costs and benefits. Such a calculation also takes into account the migrants profile and skills, making the cost benefits analysis different from person to person. In more recent years, a new economic approach has challenged the neo-classical theory. The new economics of migration says that, we should not look at migrants as isolated individuals, but as members of a household. According to this theory, it is not, in fact, the individual that chooses to migrate, but rather, the household that establishes who will leave to work abroad and support the other members by sending money home.

The migrant thus is a sort of insurance that protects the whole household against possible risk, especially in times of sickness, unemployment, and in case of natural calamities. Or even when they invest in the local economy. Lets sum up the characteristics of the two theories we have just explained. For neo-classical theory, the focus of the analysis is on the individual, while for the new economics of migration, the household. For the neo-classical theory, the purpose of migration is to increase one’s income thanks to wage differentials between the country of origin and the one of destination. For new economics of migration instead, migration finds its motivation in the need of households to protect themselves against risks.