Dissecting Network externalities in International Migration

Migrant networks play an important role in explaining the size and structure
of migration flows. They affect the private costs and benefits of migration (assimilation channel) and lower legal entry barriers through family
reunification programs (policy channel). This paper presents a
microfounded identification strategy allowing to disentangle the relative
importance of these two channels. Our empirical analysis exploits U.S.
immigration data by metropolitan area and country of origin. We first
confirm that the overall network externality is strong (the elasticity of
migration flows to network size is around one). More interestingly,
we show that only a quarter of this elasticity is accounted for by the
policy channel for the 1990-2000 period, and the magnitudes of the total
network effect and the policy channel are greater for low-skilled migrants.
Our results are strongly robust to sample selection, identification
assumptions, and treatment for unobserved bilateral heterogeneity. Finally,
the policy channel was stronger in the 1990s than in the 1980s,
possibly reflecting the changes in the U.S. family reunification policy.