The Determinants of Migration: Household and Community Networks: An Application to Mexico and other Central American Countries

Despite the great efforts scholars have devoted to the study of migration a unified and coherent theory of international migration does not yet exist. Particularly, only in recent years, scholars have developed models of labor mobility to take into account social interaction across agents. Similarly, empirical analysis lacks an adequate approach to social interaction in migration, often using very rough measures as, for example, the stock of compatriots in the receiving country. The aim of this dissertation is to examine economic migrants decision to migrate, focusing specifically on potential migrants who can choose if and where to migrate, and which conditions facilitate their migration. It investigates how wealth, social networks and education interact in determining households’ migration strategies and the aggregate dimension and composition of migration flows. Household income maximization strategy evaluates migration as a possible, but costly investment. In a context of underdeveloped financial and insurance markets, budget constraints play a key role in determining migration behavior. Poorer households have higher incentives, but fewer opportunities to migrate, whereas better-off households have fewer incentives, but greater possibilities of migrating. Social networks, reducing costs and risks of migration and thus counterbalancing budget constraints, mitigate this effect and allow new social strata to migrate. In the empirical analysis we examine Mexican migration to the U.S., proposing two new tools to apply in empirical analysis and showing that household and community networks act as complements in the probability of migration, and as substitutes in the optimal number of migrants. We also examine migration to the U.S. from five Central American countries, comparing findings with those obtained for Mexico.