Intergenerational Returns to Migration: Evidence from Italian Migrants Worldwide

Guido Neidhöfer joined ZEW in September 2018 and is currently working in the research unit “Labour Markets and Social Insurance”. His research focuses on economic inequality, education, and migration.

The main rational motivation understood to be behind migration decisions is to improve opportunities and future life chances, both for the migrants themselves and for their offspring. Using unique administrative data on Italians living abroad, we estimate the effect of parental migration on the education, employment and income opportunities of descendants in the host country, by comparing Italian second-generation immigrants with Italians residing in Italy having similar characteristics, such as age, sex, Italian region of origin and parental background. To account for self-selection on unobservable characteristics, we apply a multinomial selection bias correction framework. We find heterogeneous returns to migration across destination countries, higher returns in terms of estimated income than education, and observe important gender differences. These heterogeneity is associated with certain characteristics of the host country’s education system and labour market. Finally, we test whether the expectation of better opportunities for both migrants and their children indeed plays an important role for the migration choice.