Direct Evidence on Risk Attitudes and Migration

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 07.03.2006, 12:00 - 13:30

   

Presentation by 

David A. Jaeger (University of St. Andrews)
   

Abstract:

It has long been hypothesized that attitudes towards risk play a central role in determining
whether an individual migrates, but the empirical evidence, to the extent that it exists, has
been indirect. In this paper, we use newly-available data from the German Socioeconomic
Panel (GSOEP) to directly measure the relationship between migration propensities and
attitudes towards. We find that individuals who migrate between labor markets in Germany
are more willing to take risks. This result is robust to stratifying by age, sex, education,
national origin, and a variety of other demographic characteristics, as well as to the level of
aggregation used to define geographic mobility. We estimate a variety of cross-sectional and
panel models and find that being relatively willing to take risks is associated with an increase
of 1.2 percentage points in the probability of ever migrating between 2000 and 2004, even
after conditioning on individual characteristics. This effect is fairly substantial relative to the
unconditional migration propensity of 4.8 percent. When estimating a random effects probit
model, in which covariates such as employment, income, and marital status are allowed to
vary over time, we continue to find a positive and statistically significant relationship
between being willingness to take risks and the probability of migrating, although in relative
terms the marginal effect of willingness to take risk is only about one-eighth as large as the
unconditional probability of annual migration.

   
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