Migration, Education, and Externalities

Abstract

Migration is an age-old phenomenon across the world. It has been seen that people migrate to improve their lot. It is a logical decision based on cost-benefit analysis. This paper goes into the details of motivation of the phenomenon called migration. For a large part of the discussion, the references and data/information has been drawn from the European Union. The main reasons are that data is easily available, migration to developed European countries have been going on for quite some time, and the phenomenon has generated a fair lot of debate and politics in the recent years. This paper attempts to look at it from a scholarly point of view, particularly emphasizing on the relationship between returns to migration and education. The paper has also gone one step ahead and analyzed the situation and attempts to explain from the point of view of the economic phenomenon of ‘externalities’. The analysis throws up some interesting observations which will hold true irrespective of the geographical incidence of the phenomenon. Symmetric and easily available information on labor markets will help in better match of demand and supply of skills, and thus help the educated individuals to get better returns on their investment in education – a higher return on human capital.