Direct Evidence on Risk Attitudes and Migration

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IZA Seminar

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

Date: 07.03.2006, 12:15 - 13:30


Presentation by 

David A. Jaeger (CUNY Graduate Center)


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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