The Effect of Risk Attitudes on the Migration Decision

In this paper, I examine the impact of risk attitudes on migration decision. I use the "Two Sample Two-Stage Instrumental Variable (TS2SIV)" technique to measure relative risk aversion and its impact on migration. Using the probit model, I find that more risk averse people are less likely to migrate. The results also indicate that the impact of risk attitude on migration varies by other demographic characteristics such as age, sex etc. In addition, I test whether there is any network effect on migration and how risk attitudes vary with network effect. I consider two ethnic groups; Asian and Hispanic, and find that the size of one's own ethnic group in a source location has significant effect on the migration decisions. In addition, I also find the evidence that risk attitudes vary with network effect.