One of the issues raised by the current refugee and migration crisis in Europe concerns the question of why people take the decision to emigrate.  An emerging literature focuses specifically on institutional factors.  One strand examines the informal institutions of migration networks.  It attempts to evaluate how the strength of a social network in the receiving country, combined with the skill level of the potential migrant, influences her decision on emigration.  An interesting empirical result is that strong social networks tend to matter for low skilled emigration but not for that of the highly skilled.

Another strand of the literature examines how wealth and credit constraints influence decisions to emigrate.  The intuition is that although an increase in wealth may increase the migration possibilities of asset constrained individuals, it may simultaneously reduce the incentive to emigrate by increasing the opportunity cost of working abroad.  A natural empirical prediction from this reasoning is that since poverty is inversely correlated with skills, financial constraints are likely to prevent some low-skilled individuals from migrating.  A finding from this literature is that relaxing these constraints for some low-skilled individuals has increased their rate of emigration.

Although social networks, income distribution and credit constraints are good starting points to  understand the factors that motivate people to emigrate, other questions related to how the institutional settings of source countries influence the decision on migration also remain open.  One empirical study examines worker satisfaction with institutions that determine the provision of public services, security, or governance.  But a theory that provides a mechanism relating these types of institutions in source countries to emigration has yet to be developed.

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Dustmann, C. and A. Okatenko (2014) “Out-migration, wealth constraints, and the quality of local amenities.” Journal of Development Economics, 110: 52–63. [Working paper version]

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McKenzie, D. and H. Rapoport (2010) “Self-Selection Patterns in Mexico-US Migration: The Role of Migration Networks.” Review of Economics and Statistics, 92(4):811–821.

There is a heated ongoing debate in the field of long term economic development on whether it is geography or ‘institutions’ that has the more important direct effect on current economic performance.  However, one area of consensus in this debate is that geography has an indirect effect on economic performance through its influence on the origin of institutions.  This consensus provides the motivation for a branch of the literature that seeks the geographic origins of economic institutions in the very long run.

This literature concentrates on the geographic and biogeographic endowments conducive to the onset and diffusion of economic development over the past millennia.  Its starting point is the Neolithic revolution (approx. 10,000 B.C.), that is, the transition from hunter-gathering to agriculture and domestication, which led in turn to higher population density, more complex social and economic systems, and the emergence of the state above the tribal level.  The conventional explanation for this deep technological and social change maintains that environmental advantages were instrumental in bringing about the increase of agricultural productivity relative to foraging.  This, combined with the ability to store food, facilitated population agglomeration and the emergence of a non-food producing elite as well as the creation of rudimentary states to oversee the provision of defense.  Although empirical research has found evidence that supports this theory, recent research presents interesting challenges to the received wisdom.  A competing theory argues, for example, that the origin of a non-food producing elite and the emergence of more complex social institutions did not depend on the availability of food surplus but was instead a result of the appropriability of cereal crops from farmers.

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Mayshar, Joram, Omer Moav, Zvika Neeman and Luigi Pascali (2015) “Cereals, Appropriability and Hierarchy.” Working Paper.

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Nunn, Nathan and Diego Puga (2012) “Ruggedness: The Blessing of Bad Geography in Africa.” Review of Economics and Statistics, 94(1): 20-36. [Working paper version]

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Spolaore, Enrico and Romain Wacziarg (2013) How Deep Are the Roots of Economic Development? Journal of Economic Literature, 51(2): 325–369 . [Working paper version]