3 years ago

Self‐selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

The Roy model has more precise predictions about the self‐selection of migrants than previously realised. The conditions shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non‐migrants. We test these predictions using the Danish full population administrative data. We find strong evidence of positive self‐selection of emigrants in terms of pre‐emigration earnings and residual earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non‐migrants. Decomposing the self‐selection in total earnings reveals that unobserved abilities play the dominant role.
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