Testing Self-Selection in Migration: Evidence from the Israeli Kibbutz

This paper tests a key theoretical prediction of public finance, that redistribution discourages the participation of productive individuals. Specifically, I use a longitudinal data set to test whether and to what extent the intensive redistribution practiced by Israeli kibbutzim encourages exit of more productive individuals and entry of less productive ones. The findings support the theoretical prediction. Kibbutz-leavers are more skilled than both stayers and other rural migrants and they earn higher wages upon exit than observably similar city natives and other migrants. In contrast, individuals who earn lower wages in the city are more likely to enter a kibbutz, but they are not more likely to move to other rural areas. These findings also support Borjas’ hypothesis that migrants’ self-selection depends on the difference in returns to skills between the origin and the destination. JEL No. H00, H7, J61, N30, R23, D82 ∗Stanford University. I am grateful to Joel Mokyr, Fabio Braggion, Adeline Delavande, Zvi Eckstein, Joe Ferrie, Avner Greif, Gordon Hanson, Caroline Hoxby, Nisan Langberg, Charles Manski, John Pencavel, Rob Porter, William Rogerson, Izi Sin, Kathy Spier, Luis Vasconcelos and seminar participants at numerous universities for helpful discussions and comments. I am grateful to Raj Chetty (the editor) and to two anonymous referees for their most useful suggestions. Financial support from the National Science Foundation, Falk Institute for Economic Research in Israel, and the Sapir Center for Development is gratefully acknowledged. Finally, I thank Izi Sin for superb research assistance.