Net international migration: A panel analysis of economic determinants
Authors: Ostojic Ivana , Petrovic Predrag , Nikolic Goran 
Published: December 2021

Various factors can motivate and encourage individuals to leave their country
of origin and engage in the process of international migration. Large
migration flows over the past few years, which are a consequence of the
so-called refugee crisis in 2015, have resulted in a significant increase in
academic interest in international migration. Although many factors can
encourage international migration, people?s desire to increase their
standard of living is undoubtedly one of the most important causes. This
empirical study analyses the economic determinants of net international
migration. It was conducted using techniques of econometric analysis of
panel data on an extensive balanced panel data sample covering 136 countries
over a period of 30 years (1990-2019). Although this study focuses on the
analysis of the economic determinants of net international migration, it is
necessary to point out that in this case it is not a one-way impact. Apart
from the fact that economic indicators affect international migration, it is
indisputable that there is an effect in the opposite direction, i.e. that
migration flows significantly affect the economic performance of the origin
and destination country. This influence can be realised through different
mechanisms. The potential presence of reverse causality generates a problem
of potentially endogenous regressors, which must be considered when
selecting model estimation techniques. The estimation of the models was
performed using the following two techniques that allow cross-section
dependence: (i) standard common correlated effects pooled estimator (CCEP),
which is based on the application of the ordinary least squares method; and
(ii) modified common correlated effects pooled estimator, which is based on
the application of the two-stage least squares method, allowing the presence
of endogenous regressors. The obtained findings suggest that the impact of
the unemployment rate on net international migration is negative. Estimates
generated by the standard CCEP technique (as well as by the modified CCEP
technique) show that an increase in the unemployment rate of 1% results in a
decrease in net international migration by about 0.03 migrants (0.06
migrants) per 1,000 inhabitants. Education has a positive impact on net
international migration. The standard CCEP technique (modified CCEP
technique) points to the fact that a 1% increase in education results in an
increase in net international migration of about 0.01-0.02 migrants (0.003
migrants) per 1,000 inhabitants. The level of development of the migrant
network has a positive effect on net international migration. The standard
and modified CCEP technique show that increasing the stock of migrants by 1%
increases net international migration by about 0.04-0.05 migrants, i.e. by
about 0.01 migrants per 1,000 inhabitants. Finally, estimates obtained using
the standard CCEP technique suggest that a 1% increase in per capita gross
domestic product (GDPpc) results in an increase in net international
migration of about 0.01 migrants per 1,000 inhabitants, while the results of
the modified and more credible CCEP technique show that growth in GDPpc by
1% implies a decrease in net international migration by about 0.02 migrants
per 1,000 inhabitants. The negative effect of GDPpc could be rationalised by
the existence of an inverted-U relationship between GDPpc and emigration
(mobility transition curve). Acceptance of such an explanation requires that
the following conditions be met: (i) there is an inverted-U relationship
between emigration and GDPpc; (ii) the countries in the sample fit within
the growing part of this relationship; and (iii) when GDPpc grows,
emigration increases absolutely more than immigration.