Available online at www.sciencedirect.com
ScienceDirect
Procedia - Social and Behavioral Sciences 213 (2015) 873 – 878
20th International Scientific Conference Economics and Management - 2015 (ICEM-2015)
Theoretical insights on the migration process from economic
behaviour's perspective
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Abstract
Implications using behavioural economics aspects in migration decisions could help for countries to make appropriate policy
decisions in a time, when there are free movement of European Union citizens. Therefore, the main purpose of this article was to
propose a theoretical model of economic behaviour insights based on decision to migrate. The proposed model extent analysis
based on standard economics approach to the aspects of behavioural economics, composing framing effects, gains, losses,
reference point, loss aversion, risk aversion, risk seeking, endowment effect and comparison the situation between source and
destination countries. Differences between source and destination countries, humans needs and personal characteristics are
included as well.
© 2015
2015The
TheAuthors.
Authors.
Published
by Elsevier
©
Published
by Elsevier
Ltd. Ltd.
This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business.
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business
Keywords:Eeconomic behaviour; Neoclassical economics; New economics; rationality; Bounded rationality; Self-interested preferences; Social
preferences; Behavioural economics; Migration; Migration factors.
Introduction
Nowadays the migration issues are especially relevant. While one countries confront with difficulties of
immigration, other - emigration. These processes raise questions how countries should react upon solving the
problems increasing of migration in a time, when there are free movement of European Union citizens.
There are various theories trying to explain humans motives. Most of them are based on the view of neoclassical
and new economics looking at people as rational and self-interested. Factors analysis with linkage towards standard
* Corresponding author.
E-mail address: [email protected]
1877-0428 © 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business
doi:10.1016/j.sbspro.2015.11.498
874
Ineta Žičkutė and Vilmantė Kumpikaitė-Valiūnienė / Procedia - Social and Behavioral Sciences 213 (2015) 873 – 878
economics were used by Cattaneo (2008), Jennissen (2004), Kurunova (2013), van der Gaag and van Wissen (2008).
Other authors analyze migration using standard economics explanations but showing the necessity of implications
which could help to explain the complexity of migration process (Bonasia & Napolitano, 2012; Tupa & Strunz,
2013). New insights are given by Polgreen and Simpson (2011) implementing happiness, Czaika and Vothknecht
(2014) indicating the framework on individual's current and aspired future levels of well-being, Czaika (2015)
outlining migration prospect theory.
Given this evidence, it can be seen the demand for implications using behavioural economics aspects in migration
decisions. On this basis, the main purpose of the paper was formulated as to propose a theoretical model of
economic behaviour insights based on decision to migrate.
The paper consists of 2 sections. Standard economics approach to migration and recent analysis on factors
affecting migration decision are given in the first section and model of economic behaviour factors in the context of
migration are presented.
The research methods are based on scientific literature analysis of migration decision explanation with approach
of economic behaviour. Synthesis and systematization of the scientific literature, grouping, summarizing and
graphical modeling were used in order to achieve this paper's purpose.
1. Literature review
1.1. Standard economics approach to migration
Widely used migration theories are related to standard/traditional economics. Standard economics associative
with neoclassical and new migration theories. The main neoclassical migration theories can be summarized as
following.
x Smith (1776) and Ravenstein (1889) economic equilibrium theory. People movements were explained by wages
differences emerging from distribution of labour and capital between two regions/countries (Bauer &
Zimmermann, 1999; Jennissen, 2004);
x Heckscher (1949) and Ohlin (1993) migration theory. Analysis was based on the convergence between the wages
in the destination and the origin countries (de Haas, 2010; Kjeldsen-Kragh, 2002; Trefler, 1997);
x Todaro (1969) and Harris-Todaro(1970) rural-urban migration theory. Todaro (1980) proposed theory was
different from the previous theories as it was used assumption that individual focus not on recent earnings but
expected earnings in the future. Future incomes are evaluated by recent wages difference between destination and
origin area. The probability to find a job is considered as well. Summarizing, the potential migrant tend to move
when the benefit, calculating as difference between earnings and risk, exceeds the earnings in the origin country.
Other theories can also be attributed to the group of neoclassical migration theories as their analysis is touching
personal factors. Some of the most dominant theories could be mentioned as following.
x Sjaastad (1962) human capital theory. Migration is comprehensible as investment decision (Bauer &
Zimmermann, 1999). The main variables having the influence for decisions could be summarized as future
earnings which depends from probability to find a job, salary and migration expenses which is evaluated as
travel, living and psychological expenses;
x Lee (1966) early decision-making theory. Analysis of migration decisions was included of 4 variables groups as
positive and negative factors in the destination and origin countries, intervention difficulties and personal factors
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x Piore (1979) dual labour market theory. Theory analyze migration decision by distinguishing labour market
having two sectors - the primary and the secondary. The primary sector's jobs usually are taken by natives, while
the secondary jobs, which is not attractive, are performed by immigrants with intention to increase earnings and
the view that it is the short-term job (Jennissen, 2004);
x Borjas (1987) self-selection theory. According to the theory, people make decisions by considering to the
situation of income distribution in the destination country. High income distribution would attract person who
can be described as talented and valuable because of more favourable taxes. Contrary, low income distribution
would attract less qualified immigrants because of better social conditions. Presented theory do not analyze
Ineta Žičkutė and Vilmantė Kumpikaitė-Valiūnienė / Procedia - Social and Behavioral Sciences 213 (2015) 873 – 878
differences of average earnings and the influence of migration expenses (Liebig, 2003; Liebig & Sousa-Poza,
2004).
As a short description of neoclassical migration theories showed, the main focus was on individual. While the
theories of new economics involved the family and community in their analysis. Most frequent new economics'
theories could be identified as given below.
x Family migration theory (model as family unit and risk-sharing model). Model as family unit is presented as
family migration if they total return from migration is positive (Kubursi, 2006). Also, family can make decisions
by the model of risk-sharing when moves not all of family members 0DVODXVNDLWơ6WDQNnjQLHQơ;
x Runciman (1966) relative deprivation theory. According to theory, people have more incentive to migrate who
relatively living in poverty than rich people. Stark (1984) maintain that relative deprivation evolve from social
inequality and people choose to migrate as they want to feel more respected (Bauer & Zimmermann, 1995;
Bhandari, 2004);
x Sell and de Jong (1978) motivation decisions theory. Theory analyze four groups of factors as possibility
(physical and psychological), motive (values, wellbeing, etc.), expectation (earn money, etc.) and incentive
(evaluation of positive and negative factors in the countries of destination and origin) 0DVODXVNDLWơ 6WDQNnjQLHQơ;
x Rational expectation theory. According to the theory, people tend to migrate where total return from migration is
the highest. Variables which could be included in the evaluation are health, comfort, moral, individual
characteristics, norms, readiness for risk, adaptation, etc. (Haug, 2008);
x Wallace (1997) consumption theory. The main migration reason is presented as utility maximization. Utility
consists not only material but also immaterial value as quality of life, security, etc. (Liebig, 2003).
Above presented theories had an effect, trying to explain human behaviour in migration decisions. Nevertheless,
the science improves very fast, enabling to understand humans behaviour with less assumptions. After giving
summarized theoretical framework of standard migration process explaining theories, it is purposeful look at
analysis of particular factors, which are analyzed in currently scientific literature. Aforesaid analysis will be given in
further subsection.
1.2. Recent analysis on factors affecting migration decision
Migration process are analyzed by many authors. This subsection possess by analysis of recently analyzed
migration variables proposed by Bonasia and Napolitano (2012), Cattaneo (2008), Czaika and Vothknecht (2014),
Czaika (2015), Jennissen (2004), Kurunova (2013), Polgreen and Simpson (2011), Tupa and Strunz (2013), van der
Gaag and van Wissen (2008). Review analysis on factors affecting migration decision are summarized in Table 1.
Cattaneo (2008), Jennissen (2004), Kurunova (2013), van der Gaag and van Wissen (2008) analyzed factors have
a strong linkage with standard economics theories. Research by Cattaneo (2008) was done using determinants
identified by Harris-Todaro and human capital theories. Analysis involved differentials of wages, unemployment
rates and personal characteristics, including differences between migrants and non-migrants. Van der Gaag and van
Wissen (2008) and Kurunova (2013) supplement analysis with financial, demographic and social variables. Turning
to Jennissen (2004) study, in addition to factors as wages and unemployment, Jennissen (2004) has drawn attention
to factors proposed by dual labour market, new economics and relative deprivation theories as shortages at the
bottom of the labour market and unemployment, the certainty of sufficient household income and the level of
income inequality. Also, determinants from theories of international movement solvents are analyzed.
In an article by Bonasia and Napolitano (2012), besides traditional economic variables as real wage differentials
and probability of finding a job, effects of house prices, educational level and other determinants are given (see
Table 1). Bonasia and Napolitano (2012) rightly points out that traditional model cannot to explain the complexity
of migration process.
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A study by Tupa and Strunz (2013) shows the necessity of motivational theories implication to analysis of
migration. According to Tupa (as cited in Tupa & Strunz, 2013), the pyramid distinguishing migrant's motives by
relation to migration type are given. Migration types can be listed as refugees with physiological needs, refugees
with safety needs, migration with social needs, migrants with esteem needs and migrants with self-actualization
needs. In the pyramid for each migration type the list of motives are provided. Also, algorithm of migration are
given, identifying migration factors as individual expectations and desires, social groups and communities and
societal factors based on theories of neoclassical microeconomic, new economics of labour migration, place,
networks, neoclassical macroeconomic and dual labour markets. Tupa and Strunz (2013) has indicated that
dimensions as social, psychological and biological could be as potential areas having affect for migration decisions.
Table 1. Factors affecting migration decision
Author
Factors
Czaika (2015)
Future general economic and unemployment prospects; networks, foreign employment; income gap;
unemployment rates; job vacancy ratio
Czaika and
Vothknecht (2014)
Current subjective well-being; (economic) aspirations for the future
Polgreen and
Simpson (2011)
Happiness; GDP (per capita real gross domestic product); GDP growth (growth rate in real GDP)
Bonasia and
Napolitano (2012)
Employment rate; relative income (using per capita regional income); educational level (low/high); house
prices; carbon dioxide emission; juvenile delinquency
Tupa and Strunz
(2013)
Unemployment; number of new jobs created; self-esteem and need for fulfilment; learning and practicing
language skills; new knowledge; having a job with higher salary; social status; motives of migrant's needs
Jennissen (2004)
Real wage; real GDP per capita; unemployment; shortages at the bottom of the labour market & unemployment;
the certainty of sufficient household income; the degree of (income) inequality; average years of education;
material and cultural linkages between countries; the size and quality of the network of the migrant population
in destination country; the number and quality of organization that facilitate migration to destination country
Cattaneo (2008)
Wage; unemployment rate; personal characteristics (gender, age, education, experience, marital status) and other
info as occupation and industries
Van der Gaag and
van Wissen (2008)
GDP per capita, unemployment, employment; inflation, lending interest, real interest; female labour force
participation, employment in services, ageing of the labour force
Kurunova (2013)
GDP per capita; unemployment rate; consumer price index; minimum wages; social protection expenditures;
natural increase/decrease of population; fertility rate
Remaining authors in Table 1 give new insights which is related with behavioural economics. Polgreen and
Simpson (2011) implements happiness variable in research of migration. The work of Polgreen and Simpson (2011)
reveals that happiness has a U-shaped relationship with emigration, showing that people from very happy and
unhappy countries are tend more for emigration while from middle happiness countries - less. Authors propose
explanation using prospect theory. Also, optimism aspect explaining relationship between level of happiness and
migration decision is highlighted.
In a study of Czaika and Vothknecht (2014) indicates the framework of analysis based on individual's current and
aspired future levels of well-being. The indication is therefore that individual can be willing to migrate in order to
achieve aspired future level of well-being. Czaika (2015) extend analysis based on economic prospects, outlining
migration prospect theory. Analysis consists the main two indicators about the future general economic and
unemployment prospects. Also networks, income gap, unemployment rates and job vacancy ratio were analyzed.
The analysis of Czaika (2015) shows that aspects of behavioural economics is valid in the context of migration
process.
Ineta Žičkutė and Vilmantė Kumpikaitė-Valiūnienė / Procedia - Social and Behavioral Sciences 213 (2015) 873 – 878
877
2. Results
The evidence seems to indicate that explanation of migration decision is quite often based on analysis of view of
standard economics. Also, the previous section analysis on factors affecting migration decision shows the relevance
of migration process analysis indicating insights from behavioural economics. For instance, Czaika (2015) research
results reveals some evidence maintaining the implications of the migration prospect theory. The indications are
therefore that future analysis should take count of behavioural economics aspects whereas it is significant area for
research understanding and moving few steps closer towards answers how people make decisions in reality.
On this basis, the theoretical model of economic behaviour factors, which could be used for migration analysis
understanding migrants behaviour better, is proposed in Figure 1. Provided model is based on standard economics
approach reforming to motives of behavioural economics. The indications are therefore that analysis of migration
decisions cannot be based just on individual making rational decisions and having self-interested preferences but
bounded rationality and social preferences should be considered as well. Reduction of assumptions on standard
economics models could achieve more reality reflecting explanation of humans behaviour. Consequently, economic
behaviour on migration decisions or intention to migrate were proposed as extend of standard economics models to
the aspects of behavioural economics motives.
The work of Czaika (2015) indicates the importance of using framing effects, gains vs. losses, reference point,
loss aversion, risk aversion vs. risk-seeking, endowment effect, etc. Traditional factors analysis based on standard
economics explanations should be reconsider with behavioural factors insights, trying to answer in questions, which
could be formulated as below.
x How is the information framed, noticing towards gains vs. losses, risk and the reference point in different
changes of economic and social variables?
x How does loss aversion affect in different changes of economic and social variables? What is the difference of
weights towards equal-sized losses and gains?
x How does risk aversion and risk-seeking aspects differ between economic and social variables?
x How does endowment effect leads to a behaviour finding themselves in different situations of changing economic
and social factors and needs?
bounded
rationality
rationality
self-interested
preferences
STANDARD
ECONOMICS
MOTIVES
BEHAVIOURAL
ECONOMICS
MOTIVES
social preferences
ECONOMIC BEHAVIOUR
on migration decisions/intention to migrate
+ framing effects
+ gains vs. losses
+ reference point
+ loss aversion
+ risk aversion vs.
risk-seeking
+ endowment
effect
TRADITIONAL
FACTORS
source
country
+
BEHAVIOURAL
FACTORS
destination
country
NEEDS
PERSONAL CHARACTERISTICS
Fig. 1. Model of economic behaviour factors in the context of migration
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Ineta Žičkutė and Vilmantė Kumpikaitė-Valiūnienė / Procedia - Social and Behavioral Sciences 213 (2015) 873 – 878
Knowing people sensitivity in the appropriate situations of changing economic and social environment, it can be
reflected into designing political decisions. Also, it would be valuable to find the answers in these questions, using
complex analysis of variables - traditional factors and behavioural factors as well. The interaction of source and
destination countries shows that individuals comparing the factors between countries. Also, it should me mentioned
that proposed model is introduced for citizens of European Union countries. On purpose to distinguish humans
behaviour, their needs should be revealed and personal characteristics described as well.
Conclusions
Standard economics approach to migration and recent analysis on factors affecting migration decisions indicated
the importance to have need of wider determination based on economic behaviour of the decision to migrate.
Therefore economic behaviour's concept on migration decisions/intention to migrate was provided as extend of
standard economic to behavioural economics. The model of economic behaviour factors in the context of migration
encompasses analysis of traditional and behavioural factors. Also, the evidence seems to be strong that factors
should be analyzed composing of framing effects, gains, losses, reference point, loss aversion, risk aversion, risk
seeking, endowment effect and comparison of the situation between source and destination countries. Differences
between humans needs and personal characteristics should be distinguished as well.
Proposed economic behaviour's theoretical insights in migration process is the base for further empirical research
of economic behaviour factors influencing decision to migrate. Such analysis could provide better understanding of
human behaviour and give valuable reference for political decisions.
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