Public Choice (2008) 137: 81–102
International migration and the role of institutions
Graziella Bertocchi ·Chiara Strozzi
Received: 12 June 2007 / Accepted: 10 April 2008 / Published online: 8 May 2008
© Springer Science+Business Media, LLC 2008
Abstract We study the determinants of international migration with special attention to the
the impact of political institutions and of those institutions specifically targeted at attracting
migrants. For a dataset on 19th century migration, we find that economic and demographic
differentials play a major role, but that the quality of institutions also matter. We produce ev-
idencethatbothpolitical andmigrationinstitutionsrepresentsignificant factorsofattraction,
even after controlling for their potential endogeneity through a set of instruments exploiting
colonial history and the institutions inherited from the past.
Keywords International migration · Institutions · Democracy · Migration policy · Colonial
JEL Classification F22 · P16 · O15
A central question in the current economic debate is the importance of institutional factors in
determining economic phenomena. In this paper we focus our attention on the determinants
of international migration, with an effort to establish the relevance of different sets of insti-
tutions. In particular, we evaluate the impact of political institutions, which are linked to the
general level of democracy, and of those institutions which are more specifically targeted at
attracting migrants. We conduct this investigation for a sample of those countries that more
G. Bertocchi (?)
Department of Economics, University of Modena and Reggio Emilia, CEPR, CHILD and IZA,
Viale Berengario 51, 41100 Modena, Italy
Department of Economics, University of Modena and Reggio Emilia and IZA, Viale Berengario 51,
41100 Modena, Italy
82Public Choice (2008) 137: 81–102
actively participated in the historical experience of mass migration that took place across the
Old and the New World between the middle of the 19th century and the First World War.
The impact of institutions on this specific historical episode has not yet been fully inves-
tigated, even though the countries involved exhibited stark contrasts in this respect. Political
institutions, for instance, were far more advanced in North America than in Europe, while
Latin America took from the beginning very different routes of development, as reported by
Engerman and Sokoloff (2002). Within the Old World, during the decades under considera-
tion there is also considerable variation, both across countries and over time, with a general
evolution toward democratization and a gradual extension of the voting franchise, which can
be explained by the pressure of social unrest and by the need of modernization, as suggested
by Acemoglu and Robinson (2000) and by Lizzeri and Persico (2004), respectively. Despite
the fact that the period under investigation is usually depicted as an era of unrestricted mi-
gration, countries also developed different policies toward potential migrants. Engerman and
Sokoloff (2002) provide a historical comparison of the policies enacted in various Ameri-
can countries, which included a variety of provisions regarding access to land and public
education, all meant to attract those contemplating relocation. Citizenship policy, which can
be instrumental in enabling migrants to enjoy the benefits of the voting franchise and in
facilitating integration (Weil 2001), was also deeply differentiated, and subject to a slow
evolution. Goldin (1994) analyzes the gradual immigration policy restrictions in the United
States around the turn of the 19th century, with a focus on the debate that eventually led
to the restrictive 1917 Literacy Act, while Timmer and Williamson (1998) document the
cross-country and time-series variations in immigration policy for five destination countries
in the 1860–1930 period.
The relevance of migration within the debate on institutions, in a broader context, has
been stressed by recent research which has identified migration as a crucial channel of trans-
mission between institutions and economic outcomes. Acemoglu et al. (2001) link colonial
migration to the shaping of institutions themselves, and in turn to subsequent economic de-
velopment. Engerman and Sokoloff (2002) argue that the evolution of factor endowments
and the extent of inequality in New World economies crucially affected the evolution of
strategic institutions including migration policy. Fernandez (2007) develops an epidemio-
logical approach that treats differences in countries of ancestry as cultural proxies which
affect economic outcomes.
Recent research on 19th century mass migration—summarized in Hatton and Williamson
(2005)—has uncovered a number of economic and demographic determinants of this his-
torical event. Income differentials, usually captured by a measure of the wage gap, had a
paramount impact, with richer countries attracting larger inflows. The demographic struc-
ture of the population also mattered, because of the higher propensity to migrate of young
adults. The degree of industrialization and the consequent reallocation of the labor force
away from agriculture had offsetting effects on emigration, since a fall in the agricultural
share tended to make labor more mobile, but also to reduce the wage incentive to leave.
Network effects established through the stock of previous migrants facilitated emigration.
Given the potential relevance of institutions for the mass migration experience, in this pa-
per we review the determinants of migration in the 1870–1910 period with special attention
to the role of institutional factors. We first assess the relevance of the standard economic
and demographic determinants highlighted in the literature, in particular income differen-
tials, the level of development, the demographic structure of the population, and network
effects. Next, we evaluate the impact of institutional factors. We consider two separate sets
of institutions. The first focuses on political institutions, which capture how a country fares
in terms of political rights, not only from the perspective of migrants but also from that of
Public Choice (2008) 137: 81–102 83
its natives. This set includes information on the level of democracy and the extension of
suffrage. The second set focuses on migration institutions, i.e., those policies specifically
aimed at making a country attractive to migrants. This set includes information on the kind
of citizenship laws (i.e., jus soli vs. jus sanguinis), land distribution policy, public education
policy, and immigration policy attitudes. To come up with a single measure of institutional
quality, we also construct a general index based on the six variables described above.
The results of our empirical investigation confirm that economic and demographic fun-
damentals played a significant role in determining 19th century mass migration. However,
we also find evidence of an influence of institutional factors, with the general index of in-
stitutional quality exerting a positive impact on immigration. Moreover, we find that both
political and migration institutions positively contribute to the effectiveness of our general
index, and thus to the level of attractiveness of a country toward migrants. Our results hold
after accounting for the potential endogeneity of the institutional variables, through a set of
instruments exploiting colonial history and the quality of institutions inherited from the past.
The rest of the paper is organized as follows. In Sect. 2 we review the related literature.
Section 3 presents the basic stylized facts of 19th century mass migration. Section 4 intro-
duces a simple model of international migration. Our dataset is described in Sect. 5. Sec-
tion 6 illustrates the empirical strategy. Section 7 presents the results. Section 8 concludes
and indicates directions for future research. The Data Appendix collects detailed informa-
tion about the data employed and illustrates how we compiled the citizenship laws dataset.
2 Related literature
This paper represents a contribution to the literature on the economic impact of institutions.
Moreover, it adds to research on the political economy of migration and on the determi-
nants of international migration in a long-term perspective. It is therefore related to several
separate branches of the literature.
The connection between economic and political decisions is at the heart of the vast and
growingpublic choice field, whoseapproach has come to influence the entire economic liter-
ature, as effectively illustrated by Mueller (2003). Classic references in this field are Arrow
(1951), Downs (1957) and Olson (1965). Moreover, the seminal work of North (1981) has
established that the social, economic, legal, and political organization of a society is a pri-
mary determinant of economic performance. Among recent contributions, the most relevant
to our approach are the following. Acemoglu et al. (2001) estimate the effect of institu-
tions on economic performance by exploiting differences in the mortality rates of European
colonizers. Acemoglu and Johnson (2005) progress along this research line by comparing
the relative strength of different sets of institutions, i.e., property rights vs. contracting in-
stitutions, for economic outcomes. Persson and Tabellini (2006) decompose the impact of
different forms of democracy, i.e., electoral rules and forms of government. Engerman and
Sokoloff (2002, 2005) perform a broad comparative analysis of the evolution of institutions
that has uncovered the impact of legal origin on a variety of economic issues. Our innovation
with respect to this line of research is to select migration as the specific economic outcome
for which we test the potential impact of an appropriately selected set of institutions, i.e.,
political and migration institutions.
More specifically, we contribute to the literature that has modeled the political economy
of migration policy, following Kimenyi et al. (1986), Benhabib (1996), Razin et al. (2002),
and Gradstein and Schiff (2006), since the empirical evidence we present corroborates the
84 Public Choice (2008) 137: 81–102
relevance of migration policy for the decision to migrate. Pritchett (2006) and DeVoretz
(2006) discuss the politics of today’s labor mobility and migration policies. Rotte and Vogler
(2000) find evidence of the relevance of the political situation in sending countries on mi-
gration to Germany. Recent work on attitudes toward immigrants, by Mayda (2006) and
O’Rourke and Sinnott (2006), can also be related to our approach.
The historical experience of 19th century mass migration has been the focus of a number
of empirical studies, which have addressed both its causes and its consequences, and are
summarized in Hatton and Williamson (2005). Recent developments in the debate on the
economics of contemporary immigration are surveyed by Borjas (1994). While most of the
available research has analyzed bilateral flows from one source country to one destination,
or aggregate migration from a single source country or to a single destination, we broaden
our perspective to international migration flows. Moreover, we stress their institutional de-
terminants, beside its economic and demographic ones.
3 The stylized facts of 19th century mass migration
The period that runs from 1860 until the First World War is usually referred to as the age
of mass migration. Table 1 presents gross migration rates in the 1870–1910 period for the
14 countries on which our empirical investigation is based. The table divides countries into
two groups: Old World and New World. The Old World consists of Western European coun-
tries, which for the period all display negative rates. Most of the European emigrants were
young, poor, and unskilled. While Ireland and Britain were the main sources of emigration
initially, Germany, Scandinavia and then Southern and Eastern Europe joined in during the
subsequent decades. The New World is represented in the table by Australia, Canada and
the United States, which were on the receiving side. Out of a much scarcer local popula-
tion, these countries thus exhibit highly positive rates of immigration. The main destination
was North America, followed by South America (which is not included in our sample) and
To assess the relative importance of the phenomenon on a wider time span, Table 2
Table 1 Gross migration rates
Source: Taylor and Williamson
Public Choice (2008) 137: 81–10285
Table 2 Net migration (1,000), 1870–1998
aIncludes Belgium, Netherlands, Norway, Sweden and Switzerland. Source: Maddison (2001)
of countries similar to ours. The table confirms the magnitude of the early, mass migration
waves, with high net flows of migrants for the 1870–1913 period. Migratory movements
slow down drastically in the interwar period, to resume in the 1950s, even if it is only af-
ter 1974 that they reach a size comparable to the early one, and that yet only in absolute
terms. While data refer here to net migration, rather than gross, this distinction is unimpor-
tant for most of the 19th century due to the high cost of returning, even if return migration
did become more significant over time.
Going further back, Chiswick and Hatton (2003) describe the deep differences among
the 1860–1913 mass migration and the previous historical waves, i.e., the contracted and
coercive migration of the 1600–1790 period, and the pioneer migration of the 1790–1850
period. It is only in the middle of the 19th century that migration flows reached the massive
size that was then sustained for over 50 years, until the outbreak of the First World War.
Among the factors that made this surge possible, there are on the one hand the improvement
of the technology of transport and communication, and on the other the European famine
Economic and demographic determinants certainly had a paramount role in 19th century
migration, with richer countries attracting larger inflows, and poor countries with younger
populations and larger shares in agriculture experiencing heavier emigration, further rein-
forced by network effects. Indeed these fundamental differences between the countries on
the sending and the receiving sides were large, and such as to justify the massive relocation
of workers that we have witnessed. As argued in the introduction, however, the substantial
institutional differences which characterized the countries involved may also have played a
yet unexplored role in the process under examination.
4 A simple theoretical framework
In this section we present a simple model to guide our understanding of the potential de-
terminants of international migration. To capture the fact that migration decisions are made
over a long horizon, and taking into account also the welfare of the offspring (including
86 Public Choice (2008) 137: 81–102
for instance citizenship status), we consider a dynamic model with bequests where each
individual lives for a single period and gives birth to a single child, to whom she leaves
a bequest. Each individual has a choice between remaining in her home (or source) coun-
try and migrating into a foreign (or destination) country. All individuals are identical. Each
individual’s preferences are given by
ut= (1−θ)logxt+θ logbt+1,
where xtis the individual level of consumption, bt+1is a bequest for the individual’s child,
and θ is a preference parameter, such that 0 < θ < 1. A standard ‘joy of giving’ bequest
motive and a logarithmic functional form are assumed in order to obtain a closed-form
solution. Each individual maximizes her utility subject to the following budget constraint:
where ytis individual income. The solution to the individual optimization problem is given
by the following consumption and bequest functions:
Substituting the optimal solutions into (1), we can derive the indirect utility function as
where ξ = (1 − θ)log(1 − θ) + θ logθ. It follows that the level of utility an individual can
achieve depends on her income level. We can now analyze how the latter is determined.
We assume that individuals are simply endowed with a unit of labor which they supply
inelastically to receive a wage income, which depends on location. The migration choice
affects individual income as follows: yH
remains in the home country, where wH
quality of the home country, and δ is a positive parameter. Similarly, yF
is the income level if the individual migrates to the foreign country, where wF
of the foreign wage, πF
of migration. We assume that the level of institutional quality generates direct or indirect
material gains, and can therefore be included among the determinants of the income level,
weighted by the parameter δ. (Alternatively, we could have modeled it as an appropriately
weighted argument in the utility function.) Note that the income level constrains not only the
individual’s consumption, but also the bequest she can transfer to her offspring, and that a
component of institutional quality is represented by the ability to transmit citizenship rights.
It follows that an individual decides to migrate if and only if yF
the cost of migration. In other words, the decision to migrate, dt, can be formalized as
tis the level of the home wage, πH
tis the income level if the individual
tis the institutional
tis the level
tis the institutional quality of the foreign country, and c is the cost
t, i.e., if and only if
t−c > wH
t. The gain from migration is positive when the sum of the wage
t, and the weighted gap in the quality of institutions, δ(πF
t), is larger that
t)−c > 0.
Aggregating over individuals, the migration rate will be higher for countries with higher
wages relative to the rest of the world and for countries with more attractive institutions.
Public Choice (2008) 137: 81–102 87
Other factors previously discussed in the literature can be embedded into the model as
follows. The agricultural share of labor has been associated with larger emigration, even
though in an early stage a large share may prevent emigration by acting as a poverty con-
straint, while higher manufacturing wages may reverse the effect in later stages. These con-
siderations could be accounted for by assuming that the wage gap in favor of the foreign
country is increasing in the agricultural share of the home country. The available literature
has also highlighted that the demographic structure of the population matters for migration,
since the decision to emigrate is more likely to be taken by young individuals, so that coun-
tries with a higher share of young population tend to be associated with larger emigration.
Since in our framework the wage rate really captures life-long earning potentials, these con-
siderations could be easily embedded into a multi-period variant of the model through the
wage differential. Another potential determinant of migration is the presence of a stock of
previous migrants. This network effect can be captured by a reduction of the direct cost c.
The quality of institutions is determined by two separate sets of factors, political and
migration institutions, which affect the migration decisions through the following channels.
The quality of a country’s political institutions can be an element of attraction, because of
the pecuniary and non-pecuniary costs and benefits associated with democracy. A more de-
mocratic environment can improve the quality of the migrants’ life per se, because it may
be associated with a higher degree of equality, and because it may imply, through the fran-
chise, control over the welfare state and the associated system of taxes and transfers. Turning
to the institutions affecting migration more directly, more liberal land and education poli-
cies would facilitate relocation and integration by providing direct and indirect sources of
income. While it is true that public education policies are more likely to affect second gen-
eration migrants, in a context where generations are linked through a bequest motive, like
ours, the implied material gain is going to affect the decision made by the first generation.
Moreover, an easier ascension to citizenship, with the implied full membership in a state,
should also increase migration into a country. This applies also to provisions, such as a jus
soli policy, granting automatic citizenship to second generation migrants which—as previ-
ously mentioned—an individual values because of its impact on her offspring. To be noticed
is that, even if in practice institutional factors may have also directly affected the wage
differential or the cost of migration, our simple formulation is designed to disentangle the
impact of institutions on migration decisions from that of standard variables.
We use a dataset that is based on the sample of the 14 countries selected by Taylor and
Williamson (1997) for their econometric analysis of international convergence in the 1870–
1910 period. The countries are: Belgium, Denmark, France, Germany, Great Britain, Italy,
the Netherlands, Norway, Portugal, Spain, Sweden, Australia, Canada, and the United
States. For these countries we assemble a panel with four observations for each country,
one for each decade under consideration. In particular, we employ data on decade averages
of gross migration rates.1Moreover, we collect from various sources (details are provided in
the Data Appendix) data on the wage gap with respect to the other countries in the sample,
the agricultural labor share, and the young adult share of the population. The latter variable
is meant to proxy for the demographic structure of the population, while we proxy for net-
work effects using the lagged value of the dependent variable. The resulting dataset allows
1Data on bilateral flows across all countries in our sample are not available for this time period.
88 Public Choice (2008) 137: 81–102
to replicate, with an appropriate adaptation, previous analyses focused on economic and
We complete our dataset with variables that describe the institutional environment. We
start from political institutions, which we capture using two indicators. The first indicator is
a standard measure of the degree of democracy represented by the Polity variable from the
Polity IV (2002) dataset. This variable includes information on the institutionalized proce-
dures regarding the transfer of executive power, the extent to which executives are chosen
through competitive elections, the opportunity for non-élites to attain executive office, the
de facto independence of the chief executive, the development of institutional structures for
political expression, and the extent to which non-élites are able to access institutional struc-
tures for political expression. Our second indicator for the quality of political institutions
is a more direct, quantitative measure of the extension of suffrage, which is proxied by the
fraction of registered voters over total population.
Next, we select a set of institutions which can be interpreted as components of a broad
migration policy package, and thus are more likely to make a country more attractive to
migrants. A first indicator focuses on the kind of laws that regulated ascension to citizen-
ship. As a proxy for this indicator, we employ citizenship laws at birth at the beginning of
each decade for each country, distinguishing between legislations based on jus soli (i.e., by
birthplace) and jus sanguinis (i.e., by descent). This variable is defined by a dummy taking
on the value of 1 if a country applies jus soli, and 0 if it applies jus sanguinis. Details on this
variable, which we collect and codify, can be found in Appendix A.2.
Despite the potential relevance of citizenship policy for the decision to migrate, the use
of our citizenship laws variable as a regressor for migration can be subject to a number of
objections. First, since the return migration rate was very high by the turn of the century,
and varied a lot by country, the impact of this variable might have faded over time and may
have played a different role across countries. Generally speaking, however, even temporary
migrants may have cared about the general attitude toward integration to which jus soli poli-
cies testified. Second, British emigrants were actually in a special position when moving to
countries belonging to the British Empire, such as Canada and Australia, since they were
dual citizens of both Britain and Empire countries. We do not have information on bilateral
flows, but Hatton (1995) estimates that about 54% of British emigrants in the 1870–1913
period actually went to the United States, while only about 42% went to Canada, Australia
and New Zealand. Therefore this objection, even if taken literally, would affect only a mi-
nority of the migrants included in our sample. An additional objection may come from the
fact that all receiving countries in our sample apply a jus soli policy, so that there is no varia-
tion in this dimension across them. However, this does not invalidate our empirical strategy,
since ex ante a country with a high wage gap could turn out to be an attractive destination
even in the absence of jus soli, or vice versa. Indeed, the period witnessed internal migration
within Continental Europe, in particular toward jus sanguinis countries such as Belgium and
Germany. Likewise, a jus soli country could be associated with an unappealing earnings
differential and therefore be discarded as a possible destination. The latter is the case, for
example, for jus soli Portugal.
A second indicator of migration institutions is a measure of land distribution policy,
proxied with data on land inequality. Since land inequality data are only available at the
end of the period under consideration, we assume that policies that facilitated access to land
throughout the period must have resulted in more equal land distribution at the end of it.
A third indicator in this set is a measure of public education policy aimed at capturing to
what degree countries adopted liberal policies toward public schools. We proxy this indi-
cator taking primary and secondary school enrollment per capita. Finally, we also consider
Public Choice (2008) 137: 81–102 89
the index of immigration policy attitudes constructed by Timmer and Williamson (1998) for
five immigration countries, three of which—Australia, Canada and the United States—are
in our sample. The index, which is constructed on the basis of a detailed historical analysis
of immigration policy measures over the 1860–1930 period, is designed to reflect politi-
cal sentiment and attitudes toward immigration rather than the effectiveness of regulation.2
A positive score indicates a pro-immigration, and a negative score an anti-immigration pol-
icy attitude. A null score can therefore be interpreted as policy neutrality, or laissez faire.
Data for the remaining countries in our sample are not available but, since these are emi-
gration countries which did not develop active immigration policies during the relevant time
span, we assign them a null score. While this procedure severely limits the reliability of the
resulting index, it allows us to retain crucial information. To be noticed, however, is that
information on citizenship laws is not included in this index.3Therefore, the two indicators
do not overlap and each retains independent relevance.4
To come up with a single measure of institutions, we construct a general index of institu-
tional quality based on the six variables described above, i.e., democracy, suffrage extension,
citizenship laws, land distribution policy, public education policy, and immigration policy
attitudes. Each variable enters the index with equal weight. Our index has the advantage
of summarizing complex, multi-dimensional issues. Its Cronbach’s alpha reliability coeffi-
cient, which indicates the extent to which our indicator can be treated as measuring a single
latent variable, is 0.60, a value which is usually found acceptable in similar contexts. We
also decompose our general index into separate dimensions, in the effort to extract from our
indicators different basic packages of institutional characteristics. By applying factor analy-
sis to the dataset, we discover that our variables can be explained by three factors.5A first
factor is common to the two indicators we selected for political institutions, i.e., the vari-
ables democracy and suffrage. The Cronbach’s alpha of the index that we construct using
these two variables (each entering with equal weight) is now higher at 0.76. A second factor
is common to three of the four indicators that are designed to describe migration institutions,
i.e., citizenship laws, land distribution policy, and public education policy, while the index
of migration policy attitudes is mainly correlated with a third factor. Nevertheless, follow-
ing economic intuition, we construct an index of migration institutions including all four
variables (each entering with equal weight). Its Cronbach’s alpha is 0.57. Since migration
policy attitudes are correlated with a third factor, in the subsequent analysis we also gauge
its potential impact separately.
Beside ease of interpretation, a major advantage of relying on indexes, rather than on
single variables, rests on the fact that data limitations for this historical period make the
direct use of the latter highly problematic. By construction, our indexes span a larger set
of observations than most individual sources, thus permitting comparisons of institutions
across a broader set of countries than would be possible using any single source.6
2Indeed, while attitudes changed significantly for the worse in the period under consideration as a reaction to
the fact that migrants tended to be less skilled, the actual regulation did not change much until the First World
War, as confirmed by Hatton and Williamson (2005).
3Those three countries which are also in our dataset adopted jus soli throughout the relevant period.
4A more open citizenship policy could also be related to democracy, since one of the benefits of citizenship
comes from the ability to vote. However, in practice a democratic country could well adopt a jus sanguinis
policy, while there are also historical examples of jus soli autocracies.
5We perform maximum-likelihood factor analysis and find that the retained factors are three. The results are
similar if we use instead principal factors.
6More specifically, in creating the indexes, if an observation is missing for an institutional variable, then the
index is created using the remaining information.
90Public Choice (2008) 137: 81–102
Table 3 Summary statistics
Variable ObservationsMeanStand. dev. MinimumMaximum
Share of young
Land distribution policy
Public education policy
Migration policy attitudes
Institutional quality index
Political institutions index
Migration institutions index
Finally, to complete our dataset, we also collect information on additional variables
which have been employed in research on the impact of institutions. We include colonial
history, as captured by a dummy which takes on the value of 1 if a country has been, or still
is in the period under consideration, a colony, and legal origin, as captured by a dummy that
takes on the value of 1 if a country has a common law legal origin, and 0 if it has civil law.7
Table 3 reports summary statistics for the variables in our sample, including the indexes.
The (unreported) pairwise correlations among our institutional variables show that democ-
racy and suffrage are highly correlated (0.61), and so are land and education policies (0.66),
while in turn citizenship policy is highly correlated with land policy (0.45) but not with
the political indicators. Migration policy attitudes are uncorrelated with the other institu-
tional variables. The correlation between the colony dummy and the common law dummy
be summarized as follows: there is a significant and positive correlation of migration with
democracy (0.53), suffrage (0.60), citizenship laws (0.33), land distribution policy (0.48),
and public education policy. Moreover, migration is positively correlated with the wage gap
(0.77). Finally, evidence on the cross-sectional and time-series variations of the variables
in our panel dataset reveals that, for each variable, between-variability is much larger than
within-variability. Within-variability is especially limited for the institutional variables.
7We refer to Acemoglu et al. (2001) and Bertocchi and Canova (2002) for early work exploiting colonial
history and to La Porta et al. (1998) for the legal origins approach.
Public Choice (2008) 137: 81–102 91
6 Empirical strategy
6.1 Empirical specification
We apply the intuition derived from theory and we investigate the determinants of interna-
tional migration using the following empirical specification:
where Mit is the gross migration rate in country i in period t (with i = 1,...,14 and
t = 1,...,4—each country observation corresponding to each of the four decades included
in the period 1870–1910). Eit is a vector including economic and demographic variables
which have been traditionally used to explain the evolution of migration flows in the age
of mass migration: the wage gap, the agricultural share, the share of young population, and
lagged migration as a way to capture network effects. Iitis an index reflecting institutional
determinants and εitis the error term.
We implement a pooled OLS specification with robust standard errors clustered at coun-
try level. Clustering is employed because of the presence of groupwise heteroscedasticity
and serial correlation at country level, as revealed by the appropriate tests.8We also con-
sider fixed- and random-effects specifications. Fixed effects are significant at the 5% level
in most cases, but a fixed-effects model produces unsatisfactory results because of the large
loss of degrees of freedom. Random effects are insignificant, and a random-effects model
produces resultsthat are nearlyidentical tothoseobtained fromthepooleddata. Time effects
prove insignificant and are therefore omitted.
We can now suggest a number of specific hypotheses regarding the potential role of the
above-mentioned factors, starting with the economic and demographic variables. We expect
a positive effect on a country’s rate of migration for the wage gap. The impact of the agricul-
tural share is potentially ambiguous, as previously discussed in Sect. 1, but a negative coeffi-
cient would signal a negative impact on migration of a low development level. Similarly, the
share of young in the population should exert a negative impact by increasing emigration.
Moreover, an interaction term between the latter two variables could capture the fact that
the impact of the agricultural share on migration may be influenced by demographic fac-
tors.9Finally, if lagged migration captures important network effects, its coefficient should
Turning to institutions, since our indexes are designed to capture their quality, we expect
a positive coefficient for the general index of institutional quality, as well as for the two sub-
indexes capturing political and migration institutions. More specifically, for each variable
entering our indexes of institutional quality, we can justify its positive contribution to the
overall impact as follows. The level of democracy and the extension of suffrage should both
represent factors of attraction for potential migrants, assuming that these factors are actually
taken into account. The same can be argued for more generous land distribution and public
education policies, for more welcoming attitudes toward immigrants, and for more inclusive
citizenship laws based on the jus soli principle.
8Test results are available upon request.
9If the level of fertility were simply assumed to be increasing, in a linear fashion, with the agricultural share,
the same link would be captured by a significant coefficient of the squared value of the agricultural share
92Public Choice (2008) 137: 81–102
6.2 Instrumentation strategy
When dealing with institutions and their impact on the economic environment, we need to
account for their potential endogeneity, due to the fact that these variables may themselves
change over time under the influence of the economic environment. To deal with this issue,
we use instrumental-variables (IV) regressions, as described below.
It is easier to start our discussion of instrument selection from our indexes for political
and migration institutions, taken separately. The potential endogeneity of political institu-
tions with respect to the general level of development has been the subject of a long research
line.10Within the present context, political institutions may turn out to be endogenous with
respect to migration, since for instance a large pool of relatively poor migrants may push
toward political change. Therefore, we run IV regressions where we instrument political in-
stitutions with their initial value, i.e., the level of democracy and the extension of suffrage in
the first decade of the sample. The argument is that initial political institutions could affect
current political institutions, but should have no direct effect on current migration.
The potential endogeneity of migration institutions with respect to migration is explained
by the fact that, in principle, a country could respond to migration in selecting its land, ed-
ucation and citizenship policy, and in forming its attitudes toward immigrants. For instance,
a country could add jus soli elements under the pressure of the existing immigrants, or
could instead orient its legislation toward jus sanguinis in the presence of a large stock of
emigrants. To address this issue, we run IV regressions where we instrument migration insti-
tutions with four variables: the initial citizenship laws, education policies, migration policy
attitudes (i.e., theirvalueinthefirstdecade), andthedummycapturingcolonization.11While
the choice of the first three variables again reflects the assumption that initial policies can
affect current policies, but not current migration, the choice of the colonial dummy comes
from a tradition of investigation which has stressed the relevance of colonial heritage for a
country’s general development level. One possible objection to the use of this instrument
is that the potential presence of colonial migration, i.e., those bilateral migration flows oc-
curring between any metropolitan country and its colonies, may invalidate our strategy by
violating the exclusion restriction, because of a direct impact of the instrument on the de-
pendent variable. However, international migration in the period under consideration was
a more complex phenomenon than what colonial migration patterns could explain. For ex-
ample, British migrants were directed not just to the British colonies, while a large part of
the inflows into British colonies actually came from Continental Europe. As an alternative
to the dummy capturing colonization, we also experiment with the dummy capturing legal
origin. The two are related through the fact that legal systems are adopted or transplanted
through colonial heritage.
To sum up, for each separate set of potentially endogenous institutions we propose a sep-
an instrumentation strategy for our general institutional index, by employing a combination
of the above selected instruments.
10See, for example, Barro (1999) on the determinants of democracy and Acemoglu et al. (2005) on the impact
of democracy on income.
11Information on land inequality at the beginning of the sample is not available, therefore we cannot apply
an analogous instrumentation strategy for the land policy component.
Public Choice (2008) 137: 81–10293
Table 4 reports our regression results on the determinants of migration in the 1870–1910
period, when only economic and demographic factors are taken into account. Note that a
positive coefficient of a variable means that an increase in this variable induces immigra-
tion to the country, whereas a negative coefficient means that it induces emigration from
the country. In column 1 the coefficient of the wage gap is positive and highly significant,
confirming its crucial role as uncovered in previous studies. The agricultural share, which
captures the level of development, turns out to display a significant negative impact, induced
by large emigration out of the less industrialized countries. The share of the young popu-
lation, which proxies for the emigration intensive cohort, also has a significantly negative
coefficient, as expected. The positive and significant impact of the interaction term between
the latter two regressors can be explained by the fact that the incentive to migrate, for an
agricultural worker, is weakened in the presence of high fertility rates, i.e., in countries
which are not yet beyond the demographic transition.12In other words, the fact that a coun-
try may be still trapped by a poverty constraint depends on its agricultural share, but also on
its demographic structure.13
Table 4 The non-institutional determinants of migration. Dependent variable is migration
Share of young
Agricult. share ×
share of young
Lagged wage gap
Pooled OLS. Robust t statistics clustered by country in brackets
aSignificant at 1%
bSignificant at 5%
cSignificant at 10%
12The squared value of the agricultural share, which is commonly used to test the presence of a poverty
constraint, is found insignificant in (unreported) regressions.
13The non-monotonic relationship between development and demographic forces is investigated theoretically
within a complete dynamical system by Galor and Weil (1996).
94Public Choice (2008) 137: 81–102
The relevant literature has stressed the potential endogeneity of the wage gap, because of
its gradual reduction due to convergence, which is in turn accelerated by migration. There-
fore, for the same basic specification, we also run a regression where the wage gap is re-
placed by its lagged value. As column 2 shows, the previous conclusions hold and are actu-
ally reinforced, even though in the subsequent specifications including institutions we prefer
to retain the current value of the wage gap to avoid a drastic reduction of our sample size.
In column 3 we explore the potential role of the lagged value of the dependent variable, in
the effort to assess the importance of network effects.14As expected, lagged migration has
a positive effect, but it is insignificant, and remains so in combination with a lagged wage
gap specification (column 4).
Since the theory presented in Sect. 4 suggests that we should expect a positive sign for
the coefficients of the wage gap, the lagged wage gap and the lagged migration rate, and a
negative sign for the coefficient of the share of young over population, we also perform one-
sided tests, which imply a noticeable improvement in the significance of some coefficients.
In particular, the wage gap becomes significant at 5% in column 3, while the share of young
population becomes significant at 1% in columns 1 and 4, and at 5% in column 3.
Despite the fact that these regressions exhibit a potential omitted-variable problem which
sake of comparison with the available literature, and also because they allow us to perform
the above preliminary robustness checks with respect to alternative economic covariates in
the simplest possible set up.15
In Table 5 we add institutional variables to the standard economic and demographic re-
gressorswhichappear inthebasicspecification (column1)ofTable 4.Westartwithourgen-
eral index of institutional quality, which displays a significantly positive coefficient, while
the role of the standard regressors is confirmed and the R-squared is improved. We then
decompose institutions into their separate components. Both the political institutions index
and the migration institutions index display positive coefficients (columns 2 and 3), reveal-
ing that both components contribute to the success of the general index, even though only
the second one is significant.16
As for Table 4, we also perform one-sided tests for the significance of the coefficients for
which our theoretical predictions imply either a positive or a negative sign. Using one-sided
tests, the political institutions index becomes positively significant at 10% in column 2 and
the share of young over population becomes negatively significant at 1% in column 3.
In Table 6 we control for the potential endogeneity of institutions by running 2SLS re-
gressions. In Panel A we show the second stages, while in Panel B we show the correspond-
ing first stages. In column 1 we consider our general index, whose positive and significant
impact is confirmed when instrumented by the following two sets of instruments: the first
is the instrument we select for political institutions (including the initial values of democ-
racy and suffrage), the second is the instrument for migration institutions (including initial
citizenship laws, education policy and migration policy attitudes, plus colonial history). In
14Network effects would be best captured by immigrant stocks by source countries. However, we do not have
information on these data.
15To be noticed is that with the cluster option the degrees of freedom of each regression are determined by
the number of clusters. This is due to the fact that the clusters—not the observations—are the independent
pieces of information we have. Of course, this has implications for the significance levels of the regression
16Factor analysis in Sect. 5 suggests the presence of a separate factor for migration policy attitudes, so we
also gauge their impact separately. An (unreported) regression confirms their positive impact.
Public Choice (2008) 137: 81–10295
Table 5 The impact of institutions on migration. Dependent variable is migration
Share of young
Agric. share ×
share of young
Institut. quality index
Political institut. index5.374
Migration institut. index5.432
Pooled OLS. Robust t statistics clustered by country in brackets
aSignificant at 1%
bSignificant at 5%
cSignificant at 10%
column 2 we show that the political institutions index also exerts a significantly positive
impact when appropriately instrumented. In column 3 we run the same exercise for the mi-
gration institutions index, and its positive role is still present even though it is now less
precisely estimated. Finally, in column 4 we consider political and migration institutions
jointly. The second stage in Panel A shows that the joint significance of the two regressors
entered in column 4 is preserved even allowing for their potential endogeneity, while the
corresponding first stage regressions in Panel B (columns 4a and 4b) show that the set of
instruments we select for political institutions has no influence on migration institutions,
and vice versa. Therefore, this multiple instrumentation strategy allows to unbundle the role
of the two separate sets of institutions when jointly considered, i.e., it ensures that they do
not affect the dependent variable through the same channels.17In all above specifications,
we also replace the colony dummy with the common law dummy, but the results are not
satisfactory. To be noticed is that for Table 6 the significance of all coefficients, both in the
first- and second-stage regressions, is always unaltered when one-sided tests are performed.
To test the validity of our instruments, i.e., to test the hypothesis that the instruments are
not correlated with the errors, we perform the Hansen J-test for overidentification restric-
tions. This test is appropriate only for the general index of institutional quality, since only
in that case do we have more than one instrument for the same endogenous variable. As
17AcemogluandJohnson (2005)similarly unbundle theimpactofcontracting andproperty rights institutions.
96 Public Choice (2008) 137: 81–102
we can see from Table 6A, column 1, the p-value of the Hansen J-statistic tells us that our
instruments are valid. We test the quality of our instruments in three ways. First, we look
at the individual t-statistics for the coefficients. Then we look at the F-statistic for the null
hypothesis that all the instruments’ coefficients are equal to zero. Finally we perform the
Anderson–Rubin test for weak instruments. As we can see from Table 6B, the t-statistics
reveal that our instruments are adequate, while the F-test that the instruments’ coefficients
are zero always rejects the null. The Anderson–Rubin test shows that, in three out of four
estimations, the null hypothesis is rejected at 1%, while in one is rejected at 5% (see Ta-
ble 6A). Finally, we produce evidence that the variables we denote as endogenous are really
endogenous, on the basis of additional endogeneity tests not reported and available upon
Overall, we can therefore conclude that international migration in the 1870–1910 period
was driven by economic and demographic fundamentals but was also influenced by insti-
tutions, since a better institutional quality proves to be a significant factor of attraction for
migrants. Moreover, we disentangle the effect of political and migration institutions, and
show that each exerts a distinct, significant impact. Finally, the potential feedback between
the presence of migrants and institutions does not affect our conclusions, even accounting
for multiple sources of endogeneity.
Table 6 The impact of institutions on migration: IV estimates
Panel A: Second-stage regressions. Dependent variable is migration
Share of young
Agric. share ×
share of young
Anderson Rubin χ2
p-value of A. R. χ2
p-value of Hansen J
Public Choice (2008) 137: 81–102 97
Table 6 (Continued)
Panel B: First-stage regressions
(1) (2) (3)(4a) (4b)
Share of young
Agric. share ×
share of young [−1.65]
F of joint signifi- F(6,12) = 30.26 F(5,12) = 33.16 F(5,13) = 18.25 F(6,12) = 42.53 F(6,12) = 16.35
cance of IV
p-value of F
Pooled 2SLS. Robust t statistics clustered by country in brackets
aSignificant at 1%
bSignificant at 5%
In this paper we study the role of institutional factors among the determinants of interna-
tional migration. For a dataset on 1870–1910 migration, we first assess the relevance of
economic and demographic forces and confirm their major role as the determinants of this
historical event. The migrants that left Continental Europe for the New World were certainly
motivated by material needs and viewed their destination as the land of economic opportu-
nity. However, we find evidence that institutions mattered as well, with better institutions
being associated with higher rates of migration. These results concern not only the impact
of those institutions more specifically targeted at attracting migrants, such as citizenship,
land and education policies, but also the impact of political institutions, with more demo-
cratic countries withbroadersuffrageprovingtobemoreattracting destinations,otherthings
Our conclusions carry implications for the current policy debate on international mi-
gration and help to understand the implications of today’s restrictive policies toward labor
mobility and immigration, in a context where economic pressure to move from poor to rich
countries is high and growing, but discrepancies in the quality of institutions are also persis-
98Public Choice (2008) 137: 81–102
an anonymous referee for useful suggestions. We are also grateful to S.N. Broadberry, D. DeVoretz, T.J. Hat-
Meetings of the Econometric Society, the WDI/CEPR Conference on Transition Economics, the Conference
on Economic Growth and Distribution, the CEPR Conference on Understanding Productivity Differences,
AIEL, ENGIME, ESPE, the CEPR Conference on Institutions, Policies and Economic Growth, the CEPR
Conference on The Long Run Growth and Development of the World Economy, the Winter Meeting of the
Econometric Society, the Workshop on The Economics of Diversity, Migration, and Culture, and seminars in
Paris, Padua, Toulouse, Milan, Bologna and IZA, for helpful comments on previous drafts. Financial support
from the Italian University Ministry and the European Commission is gratefully acknowledged.
We would like to thank the editor in chief of this journal, William F. Shughart II, and
A.1 Data definitions and sources
All data are decade averages of the corresponding annual figures, except when indicated.
The reference decades are the four decades in the 1870–1910 period.
Gross immigration rates. The source is Taylor and Williamson (1997).
nominator is a simple average of the other countries’ real wages. The source is Williamson
since information on bilateral migration flows across all countries in our sample is not avail-
Log of the wage ratio, where the numerator is a country’s real wage and the de-
Percent work force engaged in agriculture. The source is Banks (2001).
Share of young population
total population, from Census data. The source is Mitchell (2003). For each decade we take
the Census closer to the year ending in 0. Note the following exceptions: for the Netherlands
the age reported is 10–29 (except in 1900), for Spain it is 16–30.
Ratio between the young (i.e., aged 15–29) population and
Polity variable from Polity IV (2002).
Registered voters over population. The source is Banks (2001).
Land distribution policy
able year after 1910 (with the exception of Germany, for which the year is 1907). The source
is Frankema (2006).
Inverse of the Gini coefficient of land holdings in the first avail-
Public education policy
is Banks (2001).
Primary plus secondary school enrollment per capita. The source
decade. The sources are Weil (2001), Joppke (1998), Brubaker (1992), and a variety of
library sources. More details on this variable are available below (Appendix A.2).
Dummy for countries that have a jus soli policy at the beginning of each
Migration policy attitudes
compiled by Timmer and Williamson (1998) for three of the countries in our sample, i.e.,
Australia, Canada, and United States. We thank J.G. Williamson for providing these data to
us. We assign a zero score to the remaining countries. Details are in the text.
Index of attitudes toward migration policy based on the index
Public Choice (2008) 137: 81–10299
Institutional quality index
policy, public education policy, citizenship laws, and attitudes toward migration. Each vari-
able enters with equal weight.
Includes the variables democracy, suffrage, land distribution
Political institutions index
enters with equal weight.
Includes the variables democracy and suffrage. Each variable
Migration institutions index
tion policy, citizenship laws and migration policy attitudes. Each variable enters with equal
Includes the variables land distribution policy, public educa-
the Correlates of War 2 Project (2004).
Dummy for countries that were at any time British colonies. The source is
Porta et al. (1999).
Dummy for countries with a common law legal origin. The source is La
A.2 The citizenship laws variable
Historical and legal background
legal rules that govern the attribution of citizenship, and therefore regulate the inclusion of
newcomers. Citizenship is associated with a precise set of rights and duties. It provides ben-
efits such as the right to vote, better employment opportunities, the ability to travel without
restrictions, and legal protection in case of criminal charges. There are also costs to citizen-
ship, such as the military draft, renunciation of the original citizenship, and the pecuniary
and non pecuniary costs that may be required for naturalization. Therefore, citizenship pol-
icy can be viewed as part of broader migration policy package, even though, contrary to
other current migration policy measures such as quotas and visa requirements, that respond
to short term business fluctuations and/or the outcome of political elections, citizenship laws
reforms tend to be the outcome of long-term processes of adaptation often involving consti-
Our codification effort focuses on the laws governing citizenship acquisition at birth,
which are therefore especially relevant for second-generation immigrants, even though they
are part of the migration decision of any parent who cares for her children and their future.
These laws originally come from the two broad traditions of common and civil law. The for-
mer applies the jus soli principle, according to which citizenship is attributed by birthplace.
This implies that the child of an immigrant is a citizen, as long as she is born in the country
of immigration. The latter applies the jus sanguinis principle, which attributes citizenship
by descent, so that a child inherits citizenship from her parents, independently of where she
In 18th century Europe jus soli was the dominant criterion, following feudal traditions
which linked human beings to the lord who held the land where they were born. The French
Revolution broke with this heritage and with the 1804 civil code reintroduced the ancient
Roman custom of jus sanguinis, only to reintroduce elements of jus soli in 1889 for mil-
itary reasons related to the draft. During the 19th century the jus sanguinis principle was
adopted throughout Europe and then transplanted to its colonies. On the other hand, the
British preserved their jus soli tradition and spread it through their own colonies, starting
with the United States where it was later encoded in the Constitution. By the beginning of
the 20th century, the process of nation-state formation and the associated codification effort
Each country of the world has developed a system of
100Public Choice (2008) 137: 81–102
were completed in Continental Europe. At the same time, the revolutionary phase was over
in those countries that had been the subject of the earlier colonization era, and 19th century
colonization had extended the process of transplantation of legal tradition to the rest of the
world. Therefore, by the end of the period of interest, most countries had completed a slow
process of adjustment of their legislation regarding citizenship acquisition, in response to
a variety of largely exogenous impulses. On the other hand, after the Second World War,
with the decolonization phase and the collapse of the socialist system, citizenship laws have
started a process of further adaptation, with a marked acceleration under the pressure of
international migration. The evolution of citizenship laws in the 1950–2000 period is inves-
tigated by Bertocchi and Strozzi (2007).
laws (i.e., jus soli vs. jus sanguinis) in place at the beginning of each decade under consid-
eration. The panel we obtain for the 1870–1910 period can be described as follows. Within
Europe, the jus sanguinis model tends to dominate, but with several exceptions. Britain, as
previously mentioned, always remains a jus soli country, and so does Portugal. Scandina-
vian countries, as well as the Netherlands, are late-comers that embrace jus sanguinis only
towards the end of the 19th century. France, on the other hand, leads the introduction of jus
sanguinis but switches to jus soli in 1889. Outside Europe, jus soli dominates not only in the
former British colonies, but also in Latin America. Despite their civil law tradition, these
latter countries chose jus soli at independence as a way to break with the colonial political
order and to prevent the metropoles from making legitimate claims on citizens born in the
To be noticed is that the citizenship laws, colony, and common law dummies—even
though potentially interrelated because British colonization is associated with the spread of
both the common law legal system and the jus soli citizenship laws—are positively but not
perfectly correlated, i.e., they do capture different institutional characteristics. The correla-
tion between the jus soli and the common law dummies is not perfect because some civil
law countries were at times associated with jus soli. This is the case of the Scandinavian
countries, which adopted jus sanguinis only toward the end of the sample, of France, which
abandoned jus sanguinis in 1889, and of Portugal, which always applied jus soli.
We classify the countries in our dataset on the basis of the kind of citizenship
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