In this paper we analyse the role of ethnic networks in the location decision of migrants to the EU 15 at the regional level.
Using a random parameters logit specification we find a substantially positive effect of ethnic networks on the location decision
of migrants. The effect is, however, decreasing in network size. Furthermore, we find evidence of spatial spillovers in the
effect of ethnic networks: ethnic networks in neighbouring regions significantly help to explain migrants' choice of target
regions. The positive effects of ethnic networks thus also extend beyond regional and national borders. Analysing the trade-off
between potential income and network size, we find that migrants would require a sizeable compensation for living in a region
with a smaller ethnic network, especially when considering regions where only few previous migrants from the same country
of origin are located.
Keywords:network migration, ethnic networks, random parameters
Forschungsbereich:Strukturwandel und Regionalentwicklung