preview

Neoclassical Macroeconomic Theory: The Initiation Of International Migration

Powerful Essays
2.1. The Initiation of International Migration These theories try to explain why international migration begins. 2.1.1. Neoclassical macroeconomic theory Considered as the earliest theory of migration, the neoclassical macroeconomic theory was developed to explain the role of labour migration in the process of economic development (Lewis, 1954; Ranis and Fei, 1961; Harris and Todaro, 1970; Todaro, 1976). According to this theory, labor migration as a process of development is caused by differences in wage rates as well as supply and demand for labor between sending and receiving countries. This approach argued that the elimination of wage differential will end migration flow as labor market is the primary mechanism that induces migration. In the case of international migration, countries with shortage of labour and excess of capital have higher wage than countries with high labour supply and dearth of capital. As a result, the wage differences motivate the migratory flow, thereby causing workers traveling from low wage countries to…show more content…
In doing so, it has offered a new level of analysis, different nature in the determinants of migration and it has shifted the emphasis of migration research from the individual independence to mutual interdependence(Stark, 1991). This model proposes that migration decisions are not solely taken by individuals, but rather by families and households with the aim of maximizing expected income, minimizing risks and eliminating constraints associated with market failures (Stark and levhari, 1982; Stark, 1984; Lauby and Stark, 1988). Accordingly, by sending a member for migration, families not only make new investments but diversify their source of income. This theory is mostly used to study the impact of family remittances by providing them with an appropriate framework for their