April 2003

IZA DP No. 770: Coordination Failures in Network Migration

published in: Manchester School, 2006, 74(6), 701-710

Previous migration facilitates future population moves, a phenomenon called network migration. However, thus far, network migration has been closely linked to network externalities. In contrast, this paper argues that the incumbent migration population can actively impact on future migration flows, yet fails to achieve a Pareto optimal network size due to coordination failures. In short, it stresses the active role incumbents take in the provision of network effects and, second, it provides theoretical evidence that self-perpetuating and sustained immigration is not at odds with rational acting individuals and must not simply be ascribed to pure network externalities.