Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S.
Thomas K. Bauer, Gil S. Epstein, Ira N. Gang
published in: Research in Labor Economics, 2007, 26, 199-229
This paper addresses the question: Why and where do immigrants cluster? We examine the
relative importance and interaction of two alternative explanations of immigrant clustering: (1)
network externalities and (2) herd behavior. We advance the theory by presenting a
framework encompassing both network and herd effects, and by delineating various types of
network and herd effects in our empirical work. In order to distinguish between herd and
network externalities, we use the Mexican Migration Project data. Our empirical results show
that both network externalities and herds have significant effects on the migrant’s decision of
where to migrate. Moreover, the significance and size of the effects vary according to the
legal status of the migrant and whether the migrant is a “new” or a “repeat” migrant. The
network-externality effect has an inverse U shape, not simply a linear positive effect as often
presented in the literature. Neglecting herds and/or networks, or the inverse U shape of
network effects leads to faulty conclusions about migrant behavior.
Text: See Discussion Paper No. 551