Title   Compensating variation and the young Portuguese emigrants: a study on how to keep our own
Author  Manuel Maria Zuzarte Reis Piedade
Advisor  Pedro Pita Barros
Year  2014
Institution  Nova School of Business and Economics
Degree  Masters
Area  Economics
Keywords  Emigration, Compensating variation, Probability of Choice, Logit
URI http://hdl.handle.net/10362/14931

Abstract

Emigration has been a very present word in Portugal. Due to the effects of the Economic Crisis and the Memorandum of Understanding policies, we have witnessed a significant yearly migration outflow of people searching for better conditions. This study aims to measure the factors affecting this flow as well as how much the probability of emigrating has evolved during the years bridging 2006 to 2012. I shall consider the decision of emigrating as Discrete Choice Random Utility maximization use a conditional Logit framework to model the probability choice for 31 OECD countries of destination. Moreover I will ascertain the compensating variation required such that the probability of choice in 2012 is adjusted back to 2007 values, keeping all other variables constant. I replicate this exercise using the unemployment rate instead of income. The most likely country of destination is Luxembourg throughout the years analyzed and the values obtained for the CV is of circa 1.700€ in terms of Income per capita and -11% in terms of the unemployment rate adjustment.