Abstract
This paper examines the relationship between individuals’ migration decisions and risk attitudes. We use the Two-Sample Two-Stage Instrumental Variable (TS2SIV) technique to measure relative risk aversion and its impact on migration. Using the probit model, we find that more risk-averse people are less likely to migrate. The results also indicate that the impact of risk attitudes on migration varies by other demographic characteristics such as age, sex, etc. In addition, we test whether there is any network effect on migration and how risk attitudes vary with the network effect. We consider two ethnic groups; Asian and Hispanic, and find that the size of one’s own ethnic group in a source location has a significant effect on the migration decisions. In addition, we also find that risk attitudes vary with the network effect.
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