New economics of migration theory

The New Economics of Migration (NEM) theory is a recent development in the field of economics that seeks to explain the complex and multifaceted phenomenon of international migration. The NEM theory emerged in the 1990s and 2000s as a response to the limitations of traditional neoclassical economics in understanding migration.

Key features of the New Economics of Migration theory:

  1. Complexity and heterogeneity: NEM recognizes that migrants are not homogeneous and that their decisions are influenced by a wide range of factors, including individual characteristics, social networks, and institutional contexts.
  2. Network effects: NEM emphasizes the importance of social networks and relationships in shaping migration decisions. Migrants often rely on existing networks to access information, resources, and job opportunities.
  3. Asymmetric information: NEM highlights the role of asymmetric information in migration decisions. Migrants may have better information about job opportunities, living conditions, and cultural norms in their destination country than non-migrants.
  4. Risk and uncertainty: NEM recognizes that migration is a risky and uncertain process, and that migrants must weigh the potential benefits against the potential costs.
  5. Institutional factors: NEM emphasizes the importance of institutional factors, such as labor market regulations, social protection systems, and immigration policies, in shaping migration decisions.
  6. Endogenous migration: NEM suggests that migration is not solely driven by exogenous factors such as economic conditions in the destination country, but rather is influenced by endogenous factors such as cultural and social norms.

Key concepts in the New Economics of Migration theory:

  1. Migration hysteresis: The idea that migration decisions are influenced by past experiences and events, and that the decision to migrate is not solely based on current economic conditions.
  2. Migration networks: The social networks and relationships that connect migrants and non-migrants across countries and regions.
  3. Migration capital: The skills, knowledge, and social connections that migrants accumulate during their migration journey, which can be used to facilitate future migration and integration.
  4. Institutional migration: The idea that institutions, such as labor market regulations and social protection systems, play a crucial role in shaping migration decisions and outcomes.

Applications of the New Economics of Migration theory:

  1. Migration policy: NEM can inform migration policy by highlighting the importance of institutional factors, social networks, and asymmetric information in shaping migration decisions.
  2. Labor market integration: NEM can help policymakers design policies to promote labor market integration and reduce the costs of migration for migrants and host countries.
  3. Development and poverty reduction: NEM can inform development and poverty reduction strategies by highlighting the role of migration in reducing poverty and promoting economic development in sending countries.
  4. International cooperation: NEM can facilitate international cooperation on migration issues by recognizing the complex and multifaceted nature of migration and the need for coordinated policies and institutions.

Overall, the New Economics of Migration theory offers a more nuanced and comprehensive understanding of international migration, recognizing the complex interplay of individual, social, and institutional factors that shape migration decisions and outcomes.