Risk Aversion and the Willingness to Migrate in 30 countries by Peter Huber, Austrian Institute of Economic Research (WIFO)

We use a large scale individual level data set (the Life in Transition Survey) to assess the impact of individual level risk aversion relative to the sending regions’ population on both the propensity to migrate abroad as well as on the propensity to migrate, internally. We find a very robust statistically significant negative impact of risk aversion on the willingness to migrate both within countries as well as on the willingness to migrate abroad. This impact is also robustly larger for the willingness to migrate within a country than the willingness to migrate abroad. These findings apply to virtually all countries considered and are robust across various specifications and to using alternative measures of risk aversion as well as different measures of the willingness to migrate. Consistent with our theoretical model differences in the impact of risk aversion on the willingness to migrate across countries are positively correlated to measures of country risks. Finally, the omission of risk aversion in migration regressions has a strong impact on results for other variables included. In our baseline specification including risk aversion reduces the marginal effect of gender and age by around one third each.