As part of their efforts to pool individual risks, households consider spreading their members over a multiplicity of locations both within their country of origin and abroad. At the same time, the world has innumerable Chinatowns and Little Italies: when people move they tend to bunch in the same location. Bunching would appear to be fundamentally at odds with the desire for risk diversification. In this paper we provide a framework to reconcile spatial bunching and spreading of migrants, combining risk-aversion and concavity of mobility costs at the household level. Evidence from Southern Italy is consistent with the main predictions from our model.
Presentation at a Seminar held by the authors at the Research Department of the Bank of Italy, 20 March 1996.
