Cross-border commuting and migration intentions: the roles of risk aversion and time preference

Abstract

137This article analyses the effects of individual risk aversion and time preference on cross-border mobility intentions using a theoretical and empirical model. The paper extends the previous literature by considering both cross-border commuting and migration as modes of mobility. The theoretical model shows that risk aversion has a negative effect on the willingness to migrate and to commute while the effect of time preference depends on expectations about the development of future wages in the home country and abroad. The empirical model, which is based on a multinomial probit regression, confirms the hypotheses regarding risk aversion and shows that the rate of time preference has a nonlinear effect on migration and commuting intentions consistent with expectations of higher real wage growth in the home country than abroad. The analysis sheds light on how time preference and risk aversion influence mobility decisions. This is especially important for integrating border regions in the European Union, in which both migration and commuting are possible. IntroductionThe decision to become internationally mobile is always a decision under uncertainty surrounding the future states of important factors such as wage levels in the home country and abroad. However, while a variety of studies have analysed the effect of uncertainty on migration behaviour-such as the literature following Burda's (1993;1995) works on the "option value of waiting", which links the investment literature of Pindyck and Dixit (see Dixit, 1992;Dixit and Pindyck, 1994;Pindyck, 1991) willingness to migrate; willingness to commute; risk aversion; time preference; discount rate; migration and commuting intentions

Personality traits, migration intentions, and cultural distance

“…Previous studies show that risk averse individuals are less likely to migrate (Jaeger et al, ) and, when they do migrate, to move to locations culturally similar to home (Bauernschuster et al, ). Likewise, we control for students' time preference since migration is modelled in the neoclassical framework as an investment decision that involves benefits to be collected in the future in return to initial costs (Gibson & McKenzie, ; Nowotny, ). Hence, individuals who are more patient are expected to be more likely to migrate than individuals who are impatient.…”

The migration of UK trained GPs to Australia: Does risk attitude matter?

“…This (11)(12)(13)(14)(15)(16)(17)(18)(19) The difference in findings may be explained by the difference in samples and/or differences in uncertainty related to the specific push and pull factors of the home and destination country. Risk averse GPs may be more likely to migrate due to the lower levels of uncertainty around clinical and career domains in Australia.…”

“…Individuals vary widely in their attitude towards risk, and risk attitude correlates with a range of behaviours including clinical decision-making, such as triage decisions for emergency patients (10). In the economics literature it has been recognised that risk attitude plays a role in migration decisions: several empirical studies have confirmed that risk seeking individuals are more likely to migrate (11)(12)(13)(14)(15)(16)(17)(18)(19). However, none of the previous studies have focused on health professionals.…”

Essays on drivers and long-term impact of migration

“…Because extraverts are more adventurous and optimistic, this could result in the fact that they perceive the psychic costs of 22 On the relation between risk preference and migration decisions, see Massey (1990) and Jaeger et al (2010). For the relation between time preference and migration decisions, see Bowles (1970) and Nowotny (2014). 23 As personality shapes preferences, preferences may also shape personality.…”

“…Previous studies showed that risk averse individuals are less likely to migrate (Jaeger et al, 2010) and, when they do migrate, to move to locations culturally similar to home (Bauernschuster et al, 2014). Likewise, we control for students' time preference 46 chapter since migration is modelled in the neoclassical framework as an investment decision that involves benefits to be collected in the future in return to initial costs (Gibson and McKenzie, 2011;Nowotny, 2014). Hence, individuals who are more patient are expected to be more likely to migrate than individuals who are impatient.…”