THE IMPACT OF INSTITUTIONAL FACTORS ON BILATERAL MIGRATION: THE GRAVITY APPROACH

We explore the impact of institutional factors on bilateral migration between the EU, the Commonwealth of Independent States (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 the 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 for cultural and institutional reasons, while the EU and the US accommodate migration for 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 the control of corruption and law, governmental regulation, political stability and democracy, and the ease of doing business on migration. Based on the results, we suggest some policy implications.