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A Theory of Migration As a Response to Relative Deprivation

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A Theory of Migration As a Response to Relative Deprivation A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Stark, Oded; Wang, You Qiang Working Paper A theory of migration as a response to relative deprivation ZEF Discussion Papers on Development Policy, No. 25 Provided in Cooperation with: Zentrum für Entwicklungsforschung / Center for Development Research (ZEF), University of Bonn Suggested Citation: Stark, Oded; Wang, You Qiang (2000) : A theory of migration as a response to relative deprivation, ZEF Discussion Papers on Development Policy, No. 25, University of Bonn, Center for Development Research (ZEF), Bonn This Version is available at: http://hdl.handle.net/10419/84711 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu ZEF Bonn Zentrum für Entwicklungsforschung Center for Development Research Universität Bonn Oded Stark, You Qiang Wang A Theory of Migration as a Number Response to Relative 25 Deprivation ZEF – Discussion Papers on Development Policy Bonn, March 2000 The CENTER FOR DEVELOPMENT RESEARCH (ZEF) was established in 1997 as an international, interdisciplinary research institute at the University of Bonn. Research and teaching at ZEF aims to contribute to resolving political, economic and ecological development problems. ZEF closely cooperates with national and international partners in research and development organizations. For information, see: http://www.zef.de. ZEF – DISCUSSION PAPERS ON DEVELOPMENT POLICY are intended to stimulate discussion among researchers, practitioners and policy makers on current and emerging development issues. Each paper has been exposed to an internal discussion within the Center for Development Research (ZEF) and an external review. The papers mostly reflect work in progress. Oded Stark, You Qiang Wang: A Theory of Migration as a Response to Relative Deprivation, ZEF – Discussion Papers On Development Policy No. 25, Center for Development Research, Bonn, March 2000, pp. 16. ISSN: 1436-9931 Published by: Zentrum für Entwicklungsforschung (ZEF) Center for Development Research Walter-Flex-Strasse 3 D – 53113 Bonn Germany Phone: +49-228-73-1861 Fax: +49-228-73-1869 E-Mail: [email protected] http://www.zef.de The authors: Oded Stark, Senior Fellow, Center for Development Research, Bonn, Germany and Professor of Economics (Chair in Development Economics), Department of Economics, University of Oslo, Norway (contact: Department of Economics, University of Oslo, P.O. Box 1095 Blindern, N-0317 Oslo, Norway) You Qiang Wang, Department of Economics, The Chinese University of Hong Kong, Hong Kong A Theory of Migration as a Response to Relative Deprivation Contents Acknowledgements Abstract 1 Zusammenfassung 1 1 Introduction 2 2 The Basic Setup 4 2.1 Example 1 4 2.2 Example 2 6 3 Societal Relative Deprivation 8 4 Conclusions and Complementary Reflections 9 Appendix 12 References 16 ZEF Discussion Papers on Development Policy 25 List of Figures Figure 1 The Migration Process of the Population of Claim 2 in Response to Relative 6 Deprivation in Periods 0 through 5 Figure 2 The Migration Process of the Population of Claim 2 in Response to Relative 7 Deprivation under “Sophisticated Reasoning Ability,” and when ε = 0.2 and δ = 0.5 A Theory of Migration as a Response to Relative Deprivation Acknowledgements The authors are indebted to two diligent referees for comments and suggestions, and to Urs Schweizer for advice and guidance. A Theory of Migration as a Response to Relative Deprivation Abstract We model migration as a response to relative deprivation. We present a specific configuration of incomes in which the process of migration in response to relative deprivation reaches a steady state. However, for the general configuration of incomes we show that it is impossible to prove the existence of a steady state. We study the social welfare implications of the two cases and show that if individuals are left to pursue their betterment, the resulting state falls short of the best social outcome. We present several implications of the model including federalism and the demand for secession. Zusammenfassung Wir modellieren Migration als eine Reaktion auf relative Verarmung. Wir stellen eine spezifische Einkommenskonfiguration vor, in der der Migrationsprozess in Reaktion auf relative Verarmung ein konstantes Gleichgewicht erreicht. Für die allgemeine Einkommenskonfiguration zeigen wir jedoch, dass es unmöglich ist, die Existenz eines konstanten Gleichgewichts nachzuweisen. Wir untersuchen die Wohlfahrtsimplikationen der beiden Fälle und zeigen, dass, wenn es den Individuen überlassen bleibt, die Verbesserung ihrer Lebensumstände herbeizuführen, das Resultat hinter dem besten sozialen Ergebnis zurückbleibt. Wir stellen verschiedene Implikationen des Modells vor, einschließlich des Föderalismus und der Sezessionsforderung. 1 ZEF Discussion Papers on Development Policy 25 1 Introduction Discontent can arise not only from having a low wage but also from having a wage that is lower than that of others. Given the set of individuals with whom comparisons are made, an unfavorable comparison could induce harder work. This idea is captured and developed in the literature on performance incentives in career games and other contests. (Early studies include Lazear and Rosen (1981), Rosen (1986), and Stark (1990).) An unfavorable comparison could also induce a departure for work elsewhere, where wages are higher, without changing the set of individuals with whom comparisons are made. This response is taken up in the literature on relative deprivation and migration. Earlier studies include Stark (1984), Stark and Yitzhaki (1988), and Stark and Taylor (1989,1991). Two results from our earlier studies merit mention here: First, drawing largely on the work of social psychologists, especially Runciman (1966), a set of axioms was formulated and several propositions were stated and proved. The key idea of the earlier studies is that a comparison of the income of i (an individual, a household, a family) with the incomes of others who are richer in i’s reference group results in i’s feeling of relative deprivation. The associated negative utility impinges on migration behavior. In particular, we have shown that the relative deprivation of an individual (or, for that matter, of a household or a family) whose income is y is ∞ RD()y = ∫ []1− F ()x dx where F()x is the cumulative distribution of income in y’s reference y group.1 Using some algebra we have further shown that RD()y = []1:− F ()y ⋅ E()x − y | x > y The relative deprivation of an individual whose income is y is equal to the proportion of those in y’s reference group who are richer than y, times their mean excess income. Second, a distaste for relative deprivation matters; relative deprivation is a significant explanatory variable of migration behavior. Yet a third response could be to sever ties with the offensive set. Leaving to associate with another set, without a change in one’s income, could also dampen relative deprivation. This reaction, not studied in earlier work on migration and relative deprivation, is the subject of the present paper. Holding income constant (as if the individual is born with an income) enables us to study migration behavior that is purely due to relative deprivation. The present paper can thus be conceived as the dual of earlier work: while in past work the reference group was held constant and migration with a gain in income served to reduce relative deprivation within a given 1 The analogous definition of RD for a finite discrete set of individuals whose incomes are y1,…,yn, where n−1 ()= []− ()()− ( ) ( ≤ ) y1 y2 … yn, is RD yi ∑ 1P y j y j+1 y j for i = 1, …, n where P y j = Prob y y j . j=i 2 A Theory of Migration as a Response to Relative Deprivation reference group, the present paper holds income constant and relative deprivation is reduced through migration with a substitution of reference groups. The main questions are: Does the process of migration in response to relative deprivation reach a steady state (wherein all migration ceases and no one is able to reduce his relative deprivation through migration)? Does migration by individuals in response to their aversion to relative deprivation lower societal relative deprivation? Does it minimize societal relative deprivation? We study the relationship between relative deprivation and migration by considering two examples. We list several results suggested by the examples. In conclusion, we offer conjectures illustrated by
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