Can we use NEG models to predict migration flows? An example of CEE accession countries

Abstract

In this paper I develop an analytically solvable and structurally estimable economic geography model and apply it to predict migration flows for the period following the CEE's integration with the EU. The main innovation of my approach is that it endogenises both, explanatory variables and the migration rate. Model's parameters are estimated econometrically using a structural equation, which is derived entirely from the theoretical NEG model. My empirical findings advocate that there is enough evidence to predict a selective migration among the three Baltic States. However, labour mobility in the Baltic countries is sufficiently low to make the swift emergence of a core-periphery pattern very unlikely at this geographical level.