Abstract
Migration facilitates the flow of information between countries, thereby reducing informational frictions that potentially hamper cross-country financial flows. Using a gravity model, migration is found to be highly correlated with financial flows from the migrant's host country to her home country. The correlation is strongest where information problems are more acute (e.g., between culturally more distant countries), for asset types that are more informational sensitive, and for the type of migrants that are most able to enhance the flow of information on their home countries, namely, skilled migrants. These differential effects are interpreted as evidence for the role of migration in reducing information frictions between countries.
| Original language | English |
|---|---|
| Pages (from-to) | 148-162 |
| Number of pages | 15 |
| Journal | World Bank Economic Review |
| Volume | 32 |
| Issue number | 1 |
| DOIs | |
| State | Published - 1 Feb 2018 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© The Author 2016. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved.
Funding
Oren Levintal (corresponding author) is an assistant professor at the Interdisciplinary Center (IDC), Herzliya, Israel; his email address is [email protected]. Maurice Kugler is a principal research scientist and managing director at IMPAQ International, Washington DC, U.S.A.; his email address is [email protected]. Hillel Rapoport is a professor at the Paris School of Economics, University Paris 1 Panthéon-Sorbonne, Paris, France, and a scientific advisor at CEPII, Paris, France; his email address is [email protected]. We are grateful to Dany Bahar, Jeffrey Frankel, Ricardo Hausman, three anonymous referees and to participants at the 8th AFD-World Bank Migration and Development Conference, World Bank, June 2015 and the LACEA Conference, 2015. This paper was initiated as part of a project on “Migration, International Capital Flows and Economic Development” based at the Harvard Center for International Development and funded by the MacArthur Foundation’s Initiative on Global Migration and Human Mobility. See Kugler and Rapoport (2011) for an early version focusing on equity portfolio flows. Hillel Rapoport acknowledges support from Cepremap and from the “Investissements d’Avenir” program (ANR-10-LABX-93). A supplemental appendix to this article is available at https://academic.oup.com/wber.
| Funders | Funder number |
|---|---|
| Harvard Center for International Development | |
| John D. and Catherine T. MacArthur Foundation | ANR-10-LABX-93 |
Keywords
- Gravity models
- Information asymmetries
- International financial flows
- International loans
- Migration