Should I Stay or Should I Go? Migration under Uncertainty: A Real Options Approach

• Published in: IDEAS Working Paper Series from RePEc
• Main Author: Khwaja, Yasmeen
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2002

This paper considers migration as an investment decision. It develops a continuoustime stochastic model to explain the optimal timing of migration, in the presence of ongoing uncertainty over wage differentials. The results show that individuals prefer to wait before migrating, even if the present v...