Migration Patterns

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Literature Review

The following part summarizes the theories and empirical literature dealing with basic migration theory and a possible effect of international immigration on internal migration. The first part introduces three theories dealing with the interplay of international immigration and domestic migration. Furthermore, economic migration theory is introduced to identify relevant control variables. The second part names empirical research applying these theoretical concepts.

Theory

Migration theory received its first contributions from Ravenstein (1885). He argues that the decisive factor of most migration decisions is the demand for labor and the connected wage difference. Similarly, Hicks (1932) explains the accumulation of workers with “differences in net economic advantages, chiefly differences in wages, [which] are the main causes of migration” (Hicks, 1932, p. 76). Moreover, he states that distance and associated commuting costs are decisive factors. Those basic ideas have been expanded by Sjaastad (1962), who develops a model, in which migrants’ decision is simulated by cost-benefit analyses.
Recent authors, like Chiswick and Miller (2015), model individual migration decisions based on utility maximization, given certain resource constraints. They adapt earlier theories that wage rate differences are an important factor but also add new variables, such as income inequality, credit and poverty constraints as well as unemployment (Chiswick & Miller, 2015). According to their theory, larger differences in income and unemployment rates facilitate migration decisions. However, it has to be noted that the mentioned theories do not distinguish internal and international migration (Chiswick & Miller, 2015). When it comes to the connection between both fields, various theories need to be included, partly from different disciplines.
A theory concerning social interactions developed by Schelling (1971) describes interdependencies between the share of minorities and segregation in a specific location. According to this theory, there are certain thresholds in the share of minorities, which, when exceeded, lead to outflows of residents, who represent the majority in the initial state. Card et al. (2008) develop a similar theory, stating that the ethnic majority of residents are likely to move if a critical value of the population consists of an ethnic minority. Similarly, Farley et al. (1994) explain the phenomenon of white residents moving away from certain neighborhoods due to increasing shares of African American residents. The authors explain such patterns with prejudices against minority groups. Applying these concepts to the case of internal migration, international immigration would facilitate internal out-migration.
Schlömer (2012) states that the effect of international immigrants on internal migration has often been neglected. He argues that when immigrants participate in local markets, they increase the demand, especially for living space. The same idea is applicable to the labor market because it can be assumed that some international immigrants “may be substitutes for some native workers” (White & Imai, 1994, p. 191). Consequently, they act as competitors in these markets to the residents. This competitive effect, in turn, increases with the number of international immigrants. As a result, internal out-migration is assumed to increase because residents are pushed out of the market because the demand for living space and jobs exceeds an economic equilibrium. Nonetheless, it has to be mentioned that this theory argues on an aggregate level and ignores that the housing market differs depending on disposable income structures. As the former theory, this one predicts that with higher numbers of international immigrants, internal out-migration tends to increase.
In contrast to the previous theories, Florida and Gates (2003) state the hypothesis that metropolitan areas with elevated degrees of diversity and open-mindedness attract qualified workers with larger stocks of human capital. They define these characteristics as “[d]iverse, inclusive communities that welcome gays, immigrants, artists, and freethinking ‘bohemians’” (Florida & Gates, 2003, p. 200). Similarly, Jacobs (1992) argues that diversity plays an important role in the quality of life for locals due to the emergence of various cultural possibilities. Consequently, one can argue that domestic workers demand a certain degree of diversity, especially highly skilled workers (Florida, 2014). Therefore, cities with larger shares of international immigrants tend to be more attractive to tolerant people, which is why they would be less likely to leave those areas. Thus, this theory implies a negative relationship between international immigration and internal out-migration.
However, it has to be mentioned that those theories do not necessarily apply to all population groups in the same way. There are population groups, included in the dataset, who are restricted in their choice of residence. These groups contain, for instance, refugees and late repatriates. Their location is determined by the authorities and thus the mentioned theories are not applicable to these specific cases. Furthermore, age groups and education level are not distinguished in the dataset. It can be assumed that factors contributing to migration decisions differ according to the individuals’ age or degree of education. Therefore, this study analyses population movements on a strongly aggregated level, which also restricts interpretations and the information value of the results.

Empirical Literature

The introduced theories can be distinguished between economic migration theory, the role of segregation, competing for living space and the demand of residents for diversity. Empirical work in each of these fields is introduced in this thesis section.

The Role of Segregation

In the US, Clark (1991) emphasizes that equilibria in the ethnic composition of the population are unlikely to be stable. They confirm the theory by Schelling (1971) and find that it is only until a certain share of an ethnic minority when integration of minorities is accepted by the majority. Card et al. (2008) estimate that share to lie somewhere between 5 and 20 percent, depending on which city in the US is considered. The percentage depends on the prevalent degree of tolerance of the respective area. This shows that the phenomenon of ethnic segregation is well researched in the US. Kritz and Gurak (2001), however, find that natives in American metropolitan areas do not respond to increases in international immigration.
Johnston et al. (2002) compare the segregation pattern in London with the one in New York and find that New York exhibits stronger segregation patterns. Bråmå (2006) and Aldén et al. (2015) applied this concept of segregation to Sweden. They conclude that the residents actively contribute to the agglomeration of immigrants in certain areas by avoiding living in areas with larger shares of ethnic minorities. In the case of Germany, Glitz (2014) finds that between 1980 and 2008, foreign workers of the same nationality tend to have a similar occupation and thus segregate themselves from not only German workers, but also from workers belonging to other minorities as well. This could be an indication of increased out-migration of residents. Although ethnic compositions of different continents, countries and even states within a country differ significantly, this subsection shows that theories by Schelling (1971) and Farley et al. (1994) are supported by empirical research.

Scarcity of Living Space

One of the main criticisms of Schlömer (2012) is that both international and domestic migration movements are usually treated as separate and independent phenomena. When entering Germany, international immigrants enter the local housing markets, which is why they have a direct impact on the location choice of natives. Schlömer (2012) mainly raises the issue of non-existent empirical research in this field. However, by looking at time series of internal and international migration in Germany, he notices that internal net migration is low when international net migration is high in the same area. He, therefore, suspects a negative or countercyclical relationship. However, because Schlömer (2012) uses net migration numbers, it is hard, if not impossible, to see if domestic in- or out-migration numbers change. Concerning labor markets, White and Imai (1994) do not find confirmation for the hypothesis of labor substitution and conclude that “outmigration remained virtually unaffected […] by the presence of immigrants” (White & Imai, p. 202).

Diversity Argument

Contrarily to the previous subsections, Florida (2002) argues that diversity in an area is a crucial factor influencing the allocation of talent and high-tech industries. Consequently, productivity and thus wages in diverse places tend to be higher than in less diverse areas. Therefore, it can be said that diversity indirectly has a positive relationship with the income level. However, it has to be mentioned that diversity, in this case, is measured using a gay index instead of agglomeration of different nationalities or cultural backgrounds. However, he states that as diversity indirectly affects income in certain areas, the area becomes relatively more attractive to both internal as well as international immigration due to expected higher income levels.
In order to emphasize the significance of diversity, Florida (2002) finds that its association to the allocation of talent dominates other factors such as median house-values, culture, recreation and climate. Furthermore, Florida (2014) categorizes those people who are attracted by diversity and exhibit higher incomes as members of the so-called ‘Creative Class’. In interviews of focus groups and surveys, Florida (2014) found that basic values of Creative Class members are, among others, diversity and openness. It can thus be assumed that members of this group are less likely to leave an area that experiences international immigration, which can be seen as an equivalent for increasing diversity.

Control Variables

As mentioned before, the economic migration theories mostly analyze internal and international migration separately (Chiswick & Miller, 2015). Consequently, the same variables have been included in empirical research in both scopes of migration analysis, internal and international. Due to the exclusion of international immigration in internal migration analyses (Poot et al., 2016), economic migration theory is primarily used to identify control variables for the subsequent analysis.
In international contexts, empirical research confirms a negative relationship between income in origin countries and emigration numbers (Badulescu et al., 2017; Ramos & Suriñach, 2017). Contrarily, the income levels in the destination countries exhibit positive relationships with the number of immigrants (Karemera et al., 2000; Ramos & Suriñach, 2017). Similarly, concerning domestic migration, income differences between two locations are found to be a driving force for the migration decision (Gries et al., 2016; Mitze, 2012; Parikh & Van Leuvensteijn, 2002). Additionally, both the size of the population in the origin and destination country are found to be statistically significantly connected to the number of migrants (Cohen et al., 2008; Letouzé et al., 2009). Findings concerning population in domestic settings are accordingly. Both, origin and destination population, show a positive impact on migration (Claeson, 1969; Flores et al., 2013; Wajdi et al., 2017).
Furthermore, unemployment rates reveal significant impacts on domestic migration. Concerning the origin, higher rates are associated with higher out-migration numbers (see, e.g. Decressin, 1994; Mitze, 2012; Olsson, 1965). Contrarily, unemployment in the destination location is negatively related to migration, meaning places with lower rates are expected to experience higher in-migration (Flores et al., 2013; Gries et al., 2016; Jandová & Paleta, 2015). Moreover, Letouzé et al. (2009) and Wajdi et al. (2017) find a positive relationship between the education level in the destination area and migration numbers. In addition to that, Piras (2017) finds a negative relationship between the education level in the origin region and the number of migrants.
In accordance with the theory, Cohen et al. (2008) and Ramos and Suriñach (2017) find statistically significant negative connections between the covered distance between origin and destination and the number of international migrants. Similarly, in a domestic migration setting, distance is negatively associated with migration (Flores et al., 2013; Kirana et al., 2018; Wajdi et al., 2017). A factor positively affecting the extent of migration is when the respective areas share a common border (Letouzé et al., 2009; Ramos & Suriñach, 2017). Nonetheless, some regions show individual characteristics that need to be taken into consideration. In the case of Germany, Glorius (2010) states that between the reunification of East and West Germany and 2006, the eastern states have realized a net migration loss of nearly ten percent of the former German Democratic Republic’s (GDR) population. Although authors find a pattern of convergence of wages (Hunt, 2000; Kemper, 2004), which in turn reduced the number of migrants in the mid-1990s, it is important to consider such specialties when focusing on a single country.

1. Introduction 
1.1 Problem
1.2 Purpose
1.3 Delimitations
1.4 Disposition
2. Literature Review
2.1 Theory
2.2 Empirical Literature
2.3 Hypotheses
3. Model
3.1 Data
3.2 Method
4. Results
4.1 Diagnostic Tests
4.2 Analysis/Interpretation
4.3 Limitations
5. Conclusion
6. References
7. Appendix
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International and Domestic Migration Patterns