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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