The Impact of Institutional Factors on Bilateral Migration: the Gravity Approach

Abstract

We explore the impact of institutional factors on bilateral migration among the EU, CIS, and the US by applying the gravity model of migration. We employ instrumental variables methodology (IV-PPML, IV-GMM) and a non-linear estimation approach (NLS) to test our assumptions about the spurring effect of institutional indicators on migration. Empirical results demonstrate a significantly positive effect of economic development and legislative system on migration flows in the sample countries. However, we find that government regulation and political stability decrease migration. We also find that Russia attracts CIS migrants due to cultural and institutional reasons, while the EU and the US accommodate migration due to economic reasons. The crucial role of institutional development as a determinant of international migration is often overlooked in contemporary literature. We generate new insight into the contribution of control for corruption and law, governmental regulation, political stability and democracy, and ease of doing business to migration. Based on the results, we provide some policy implications.