DP7407 Determinants of the Choice of Migration Destination

Author(s): Marcel Fafchamps , Forhad Shilpi

Publication Date: August 2009

Keyword(s): migration , south Asia , income differentials

JEL(s): J61 , O15

Programme Areas: Development Economics

Link to this Page: www.cepr.org/pubs/dps/DP7407.asp.asp

This paper examines migrants' choice of destination conditional on migration. To this end, we design an empirical strategy which remedies both migration selection and unobserved heterogeneity problems. The study uses data from two rounds of Nepal Living Standard Surveys and a Population Census and examine how the choice of a migration destination is influenced by income differentials and other covariates. We find distance, population density, and social proximity to have a strong significant effect: migrants move primarily to proximate, high population density areas where many people share their language and ethnic background. Better access to amenities is significant as well. Differentials in average income across districts are significant in univariate comparisons but not once we control for other covariates. Differentials in consumption expenditures are statistically significant but smaller in magnitude than other determinants. It is differentials in absolute, not relative, consumption that seem to matter most to work migrants. Except for the latter, results are robust to different specifications and datasets.