Migration, Self-selection and Returns to Education in the WAMEU

Abstract

Using data from labour force surveys conducted simultaneously in the capital cities of seven WAEMU countries, we estimate a model of residential location choice, in which expected earnings play a role. The model is first estimated in a reduced form. Estimates are then used to correct for the endogeneity of locational choice in earnings equations estimated for each country. We find that migration behaviour has a significant effect in shaping earnings differentials between education levels and between the seven capital cities. A minimum distance estimator is then used to recover the value of log-earnings in the structural model of residential location choice. Results show that individuals tend to reside in countries in which their expected earnings are higher than elsewhere.