1. Migration versus Delocation: The Neoclassical Approach Cristina Procházková Ilinitchi Department of World Economy Faculty of International Relations University of Economics, Prague Email: xilic01@vse.cz

2. General terms and ideas Migration: the displacement of a person who leaves his/her place of birth/residence for another place Migration: the displacement of a person who leaves his/her place of birth/residence for another place Delocation: migration of companies (capital) Delocation: migration of companies (capital) Modelating migration: how and why? Modelating migration: how and why? It is possible to deduct the main factors which have a significant influence on migration flowsIt is possible to deduct the main factors which have a significant influence on migration flows These factors can be integrated within miscellaneous (mathematical) modelsThese factors can be integrated within miscellaneous (mathematical) models The conclusions can be used (mainly) by the governments (migration policies, FDI, etc.)The conclusions can be used (mainly) by the governments (migration policies, FDI, etc.)

3. Some of the main approaches Gravitation models Gravitation models state that the volume of migration is inversely proportional to the distance travelled and directly proportional to the relative size of the origin and destination placesstate that the volume of migration is inversely proportional to the distance travelled and directly proportional to the relative size of the origin and destination places Neoclassical approach Neoclassical approach W i - wages at place i; W j – wages at place j, C ij - migration costsW i - wages at place i; W j – wages at place j, C ij - migration costs wage differentials are the primary factors driving migrationwage differentials are the primary factors driving migration prospective migrants maximize their incomeprospective migrants maximize their income In the Todaro model wages are replaced by expected incomesIn the Todaro model wages are replaced by expected incomes Behavioral models Behavioral models in the 1980s research emphasis shifted from aggregate models to behavioral models that focus on individualsin the 1980s research emphasis shifted from aggregate models to behavioral models that focus on individuals an individual n at place i will migrate to place j if the net benefits from migration exceed the migration costsan individual n at place i will migrate to place j if the net benefits from migration exceed the migration costs

4. The neoclassical approach – fundamental assupmtions People are rational People are rational Individuals and firms maximize utility or profit Individuals and firms maximize utility or profit Individuals behave independently and with full information Individuals behave independently and with full information As a result, free markets usually bring about an efficient allocation of resources As a result, free markets usually bring about an efficient allocation of resources

5. Labour vs. capital mobility in the neoclassical approach International migration is caused by geographical differences in the supply and demand of labor International migration is caused by geographical differences in the supply and demand of labor The wage differential will cause workers from the low-wage regions to move to the high-wage region The wage differential will cause workers from the low-wage regions to move to the high-wage region low wage region high wage region low wage region high wage region LABOR CAPITAL LABOR CAPITAL As a result of the movement, the supply of labor will decrease and wages will rise in the capital-poor region, while the supply of labor will increase and wages will fall in the capital-rich region As a result of the movement, the supply of labor will decrease and wages will rise in the capital-poor region, while the supply of labor will increase and wages will fall in the capital-rich region If capital and labor are perfectly mobile, in the long run market forces create a new equilibrium where wages have the same levels in all regions If capital and labor are perfectly mobile, in the long run market forces create a new equilibrium where wages have the same levels in all regions

6. Labour vs. capital mobility in the neoclassical approach

7. The evolution of net FDI inflows and the impact on net migration Do FDI flows influence the migration flows? – first basic empirical study Do FDI flows influence the migration flows? – first basic empirical study

8. Conclusions and further research The main goal is to show a possible connection between delocation and migration The main goal is to show a possible connection between delocation and migration Hypothesis: net FDI inflows are negatively correlated with the country’s net emigration (in the Easthern Europe countries) Hypothesis: net FDI inflows are negatively correlated with the country’s net emigration (in the Easthern Europe countries) Further empirical research is to confirm or to reject this assumption Further empirical research is to confirm or to reject this assumption