“It’s the Economy, Stupid!”: On the Relative Impact of Political and Economic Determinants on Migration

Abstract

The present study empirically analyzes determinants of immigration to EU member countries for the period 1998–2016. By performing PPML regression, it investigates the dynamics of different political and economic determinants. In general, there are two opposing effects: better living conditions in the origin country increase the feasibility of migration (feasibility hypothesis), but they also decrease international differentials, thus diminishing the incentive to migrate (incentive hypothesis). Indeed, better economic conditions in the origin country ease the budget constraints of potential migrants and thereby stimulate emigration to EU countries (feasibility hypothesis). At the same time, the income differential between destination and origin country is also positively related to migration, supporting the incentive hypothesis. Contrary to these findings about economic determinants, the impact of political determinants is only robust in one direction, for migration from outside the EU. Here, worse political conditions in the origin country increase the need to migrate, causing flight migration (need hypothesis). Altogether, economic determinants appear to outweigh political factors.