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Rational inattention and migration decisions

Abstract : Acquiring information about destinations can be costly for migrants. We model information frictions in the rational inattention framework and obtain a closed-form expression for a migration gravity equation that we bring to the data. The model predicts that flows from countries with a higher cost of information or stronger priors are less responsive to variations in economic conditions in the various destinations, as migrants rationally get less information before deciding where to move. The economet-ric analysis reveals systematic heterogeneity in the pro-cyclical behavior of migration flows across origins that is consistent with the existence of information frictions.
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Submitted on : Monday, July 20, 2020 - 1:54:41 PM
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Jesus Fernandez-Huertas Moraga, Simone Bertoli, Lucas Guichard. Rational inattention and migration decisions. Journal of International Economics, Elsevier, 2020, pp.103364. ⟨10.1016/j.jinteco.2020.103364⟩. ⟨hal-02902862⟩

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