POLITICAL ECONOMY

WORKING PAPERS

A simple theory of permanent migrations: The case of

Gypsies

João Ricardo Faria

Political Economy Working Paper 04/04

FEBRUARY 2004

SCHOOL OF SOCIAL SCIENCES

THE UNIVERSITY OF TEXAS AT DALLAS

RICHARDSON, TEXAS 75083-0688

AN EQUAL OPPORTUNITY/ AFFIRMATIVE ACTION UNIVERSITY

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A simple theory of permanent migrations: The case of Gypsies

João Ricardo Faria

School of Social Sciences, University of Texas at Dallas

Abstract: One of the main characteristics of the Gypsies is their continual mobility. The

permanent migration behavior becomes a habit. This paper provides a simple dynamic

model to explain permanent migrations, such as the Gypsies’, by the formation of

migration habits. The model derives the optimal levels of Gypsies’ consumption,

migration, migration habits and income, as a function of the importance of habits, the

relative importance of recent migrations on habit formation, Gypsies’ time preference,

and the marginal impacts of actual consumption and migration on consumption variation.

Keywords : Migration; Minorities; Intertemporal choice.

JEL Classification Numbers : J15, J61, D99

Acknowledgements: I would like to thank, without implicating, Miguel Leon-Ledesma

for useful comments.

Address for Correspondence: J.R. Faria, School of Social Sciences, University of Texas

at Dallas, P.O. Box 830688, GR 31, Richardson, TX 75083-0688, USA. Phone: 972-883

6402, Fax: 972-883 6297. E-mail: jocka@utdallas.edu

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A simple theory of permanent migrations: The case of Gypsies

“I shall here content myself with observing that from whatever country they come, whether from India or Egypt, there can be no doubt that they are human beings and have immortal souls” George Borrow, The Zincali - An Account of the Gypsies of Spain.

1. Introduction

In economics migration is usually understood as a result of a differential of

economic opportunities between two different regions. People migrate whenever the

economic opportunities are better abroad than at home. Basically economists focus on

income differentials as the main engine of migration [e.g., Todaro, 1969]. In a world

without barriers of labor mobility this mechanism would lead to an equalization of

income everywhere and migration would end as soon as the income differentials

disappear. According to this view, rational economic agents calculate, taking into account

all relevant constraints such as costs of assimilation and risk differentials [e.g., Chiswick,

1978; Stark and Levhari, 1982; Levy and Tsur, 2002], and decide to migrate whenever

total benefits are greater than total costs. Therefore the decision to migrate is endogenous.

The economic mechanism, however, fails to explain particular episodes of

migration, such as the Stalinist transposition of peoples in the Soviet Union before the

WWII [Faria and Mollick, 1996] or more recently the expulsion of Asians from Uganda

by Idi Amin dictatorship 1. These are examples of forced migration, which were triggered

by exogenous forces that pushed some populations out of their homes. The main force

behind their migration lies on government political motivations and decisions. Therefore

1 In 1972 President Idi Amin gave the 80,000-strong Asian community [65% Hindu] of Uganda ninety days in which to leave the country, after which their businesses and homes would be handed over to native Ugandans.

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the migration decision is exogenous to these populations. That is, the individual decision

to migrate motivated by economic reasons have played a very small role in these cases2.

Another interesting type of migration is provided by nomadism. Nomadism is

characterized by permanent migration. Tribes of hunter-gatherers move from region to

region following the availability of resources [game and harvests] throughout the seasons

[see Cabeza de Vaca, 1555], so the economic explanation addresses satisfactorily their

seasonal migrations.

However, there are certain kinds of nomadism that defy the explanations of

migration presented above. The case of the Gypsies3 [or Roma, Rom4, or Romani people]

is one of them. Despite the fact that in their history5 the Gypsies have suffered

innumerous persecutions and expulsions [see Hancock, 1987], no one would argue that

their permanent migration pattern is always consequence of expulsions6. In the same

vein, some of their migrations may have been stimulated by better economic perspectives

elsewhere; nevertheless it is hard to explain their permanent migration as resulting solely

from economic aspects. Therefore, no matter if in a given instant of time the migration of

the Gypsies is triggered by economic reasons or forced expulsions, what makes their

2 See Faria (1998) for an analysis of the expulsion of the Jews from Spain in 1492. Despite being a forced migration, individuals could decide to stay in Spain by rejecting Judaism and converting to Catholicism. 3 The name Gypsy is the shortening of “Egyptians”, because in the middle-ages dark-skinned people from the Middle-East had been brought to Europe before the arrival of the Roma [Gypsies, see next footnote] were loosely called "Egyptians". In The Hunchback of Notre-Dame (1831), Victor Hugo makes the poet Pierre Gringoire to wonder about the 16 year-old gypsy girl Esmeralda’s name: “Of what language can that word be?- it must be Egyptian”[1993, p.44]. Some authors [e.g., Russell, 1998] find the word "Gypsy" a derogatory, pejorative and offensive term to the Roma. Of course, in this paper the name of Gypsies designate the Roma people without any prejudice. 4 Actually, the Rom also designate one of the three populations of Roma and refers to the Romani of western Europe, the ones that are the focus of this paper. The remaining two populations of Roma are the Dom of eastern Europe and the Lom of central Europe. 5 See Hancok (2002) for a history of the Rom. Lee (1998) provides a short account of their history. 6 The Roma of Romania were enserfed [e.g., Prodan, 1990] [from around 1500 to 1864] and of course were less mobile than the other Roma populations in Europe. Other episodes of enslavement of Roma, for shorter periods, occurred in Spain and Portugal and some of their American colonies [Hancock, 1997].

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migration pattern different is the fact that they keep moving from one place to another

mainly by their own volition.

In fact, as Borrow ([1841], 1996, p. 17) pointed out:

“(…) the Gypsy is like Cain, a wanderer of the earth; for in England the covered cart and the little tent are the houses of the Gypsy, and he seldom remains more than three days in the same place”

the citation above conveys the idea that the Gypsies, at least whenever possible, migrate

for the sake of migration. It is as if migration creates a habit that ends up characterizing

the people as a whole: Gypsies to be Gypsies need to migrate and keep migrating. This

leads to the idea that Gypsies derive satisfaction from migration and the habits associated

with it. The reason for this may lay in the fact that Gypsies value "freedom" a lot7.

Settling in a specific place or country would imply, on the one hand, in investing in fixed

capital, such as real states, houses, etc, and, on the other hand, would imply in mixing

with other people and therefore taking the risk to dilute their culture and heritage 8.

Indeed, many aspects, if not the main traits, of their culture are permeated or can be

traced back to the ir previous migrations9.

This is exactly the insight of this paper. It explains permanent migrations, such as

the Gypsies’, through the simple idea of habit formation. The habit formation hypothesis

has gained strength in the literature with the work of Duesenberry [1949] on habit

7 I owe this point to Miguel Léon-Ledesma. 8 Beynon (1936) exposes the view that Gypies are pariahs, as a consequence they live socially and spatially on the periphery of the community in which they make their living. 9 This certainly holds true for their language that borrowed words and terms from many countries were they lived for a while. It is also acknowledged by The Patrin Web Journal (1999) that Romani customs and traditions are as diverse as the number of Roma nations and the countries they inhabit. Romani culture is diverse and there is no universal culture per se, but there are attributes common to all Roma: loyalty to family (extended and clan); belief in Del (God) and beng (the Devil); belief in predestiny; Romaniya, standards and norms, varying in degree from tribe to tribe; and adaptability to changing conditions. Integration of many Roma into gajikané (non-Roma, or foreign) culture due to settlement has diluted many Romani cultural values and beliefs. Not all tribes have the same definition of who and what is "Roma."

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formation in consumption. Recently this hypothesis has been applied in a variety of cases

such as addiction [Becker and Murphy, 1988], cyclical consumption [Dockner and

Feichtinger, 1993], labor supply [Faria, 2002], and exchange rate determination

[Mansoorian and Neaime, 2002] to quote a few. Departing from the focus on

consumption, Faria and León-Ledesma (2004) extended the idea of habit formation to

describe the formation of working habits, which helps explain many observed cultural

differences towards attitudes to work. The present paper reinforces the view that the habit

formation idea should not be confined to consumption but can and should be applied to

other economic variables. Here, the hypothesis of habit formation is extended to study the

formation of migration patterns, in particular, permanent migration.

The objective of this paper is to provide a simple dynamic model to explain

permanent migrations, such as the Gypsies’, by the formation of migration habits. The

model derives the optimal levels of Gypsies’ consumption, migration, migration habits

and income, as a function of the importance of habits, the relative importance of recent

migrations on habit formation, Gypsies’ rate of time preference, and the marginal impacts

of actual consumption and migration on consumption time variation.

2. The Model

Table 1: Endogenous Variables and Parameters

ENDOGENOUS VARIABLES PARAMETERS

M = Migration θ = Gypsies’ rate of time preference

H = Migration habits ρ = Relative weights of migration at different times

C = Consumption γ = Index of the importance of migration habits

Y = Income a = Marginal impact of actual consumption on consumption time variation

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λ = Co-state variable associated with consumption µ = Co-state variable associated with migration habits

b = Marginal impact of actual migration on consumption time variation

The representative agent is the chief of a clan of Gypsies. He cares about

migration and the habits associated with it, because these habits constitute great part of

their culture. As exposed in the introduction, what characterizes Gypsies is their mobility.

Thus Gypsies derive satisfaction from migration (M) and migration habits (H). This idea

is captured by the following instantaneous utility function: HMHMU loglog),( γ+= ,

where γ indexes the importance of migration habits.

Migration habits are acquired by past migration, and in line with the literature

[e.g., Carroll et al., 2000], the stock of migration habits is a weighted average of past

migrations. The time variation of the stock of migration habits is:

][ HMH −=•

ρ (1)

wheredt

dXX ≡•

denotes the time variation of variable X, and ρ>0 stands for the relative

weights of migration at different times. A larger ρ indicates that recent migration is more

important in habit formation than past migrations.

In this model, the consumption pattern of Gypsies is not a choice variable.

Provided that Gypsies have to migrate and keep migrating, their consumption pattern is

beyond their control, since it varies with the economic conditions from place to place. In

this sense we assume that Gypsies’ consumption evolves according to two factors: actual

consumption (C) and migration (M). As migration involves costs, they are reflected

negatively on the evolution of Gypsies’ consumption and captured by parameter b.

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Concerning the impact of present consumption on the time variation of

consumption, we assume that if instead of keeping migrating, the Gypsies settled

voluntarily in a given western European country [on the condition they were allowed to

stay], we would expect the rate of growth of their consumption to increase as it did with

the native populations. In line with the increase in the standard of living of western

Europe over the past 500 years, we assume that in the absence of migration [i.e., b=0],

the rate of growth of Gypsies’ consumption would be positive and, for simplicity,

constant and equal to a.

Therefore, the evolution of Gypsies’ consumption is described by the following

expression:

bMaCC −=•

(2)

The representative Gypsy maximizes a discounted, infinite stream of utility:

dteHM t

MMax θγ −

∞

∫ +0

]log[log

subject to equations (1) and (2), where the parameter θ denotes Gypsies’ rate of time

preference.

The current value Hamiltonian of this problem is:

][][loglog HMbMaCHMJ −+−++= µρλγ

where λ is the co-state variable associated with consumption and µ is the co-state

variable associated with migration habits.

The first order conditions are:

00 1 =+−⇒= − µρλbMJ M (3)

9

][ aJC λθλλθλλ −=−⇒−=−••

(4)

][ 1 µργθµµθµµ −−=−⇒−=− −••

HJ H (5)

plus equations (1) and (2) and the transversality conditions.

The steady state solution of this model, 0====••••µλHC , is the following:

HMH =⇒=•

0 (6)

bMaCC =⇒=•

0 (7)

λλλθλλ =⇒=⇒=•

a0 (8)

1][0 −•

=+⇒= Hγρθµµ (9)

00 1 =+−⇒= − µρλbMJ M (10)

Without loss of generality we can assume 1== λλ in equation (8). There remain

four equations [(6), (7), (9) and (10)] for four unknowns: M, H, C, and µ. Notice that by

introducing equations (6) and (10) into (9) and solving for M, it yields the steady state

level of migration (M*):

)(1

*ρθ

γρ+

+=bb

M (11)

The equilibrium level of migration habits, H*, immediately follows from equation

(6) and it is the same as the equilibrium value of migrations:

)(1

*ρθ

γρ+

+=bb

H (12)

The steady state value of consumption, C*, is found by substituting M* into

equation (7):

10

)(1

*ρθ

γρ+

+=aa

C (13)

In order to assess the equilibrium income of the Gypsies, Y*, it is important to

stress that an implicit assumption of this model is that Gypsies do not save and,

consequently, do not accumulate capital [Gmelch, 1986]. Therefore their actua l income10

is allocated between only two alternatives: actual consumption and actual migration

costs, )(Mδ , which are directly proportional to migration: 0)(' >Mδ . Given that the

equilibrium values of consumption and migration are determined above, the equilibrium

income of Gypsies is:

*)(** MCY δ+= (14)

The equilibrium solutions (11)-(14) show the endogenous variables of the model

as functions of the parameters: importance of habits, the relative importance of recent

migrations on habit formation, Gypsies’ rate of time preference, and the marginal impacts

of actual consumption and migration on consumption variation. The comparative statics

analysis of the steady state solutions [see Appendix] allows us to assess the impact of the

parameters on the endogenous variables of the model. They are presented in Table 2

below:

Table 2: The impact of parameters on the endogenous variables

M* H* C* Y* a 0 0 (-) (-) b (-) (-) 0 (-) ρ (+) (+) (+) (+) γ (+) (+) (+) (+)

10 Borrow (1841) describes the occupations of the Gypsies from Russia to Spain. In general, the women specialize in fortune-telling and entertainment, such as singing and dancing, while the men are tinkers and smiths, a particular trade is as manufacturers of horseshoes. Curiously, in the sixteenth century Spain vagabonds were defined as including Gypsies and foreign tinkers, and the penalty for vagabondage include a number of years on the galleys [see Thompson, 1968].

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θ (-) (-) (-) (-)

From Table 2 it follows that all endogenous variables are impacted in the same

way by the parameters of the model, with the only exception of parameters a and b. An

increase in the Gypsies’ impatience, captured by an increase in their rate of time

preference θ, decrease the equilibrium levels of migration, M*, migration habits, H*,

consumption, C*, and income, Y*. An increase in the relative importance of recent

migration in habit formation, given by ρ, or in the importance of migration habits, given

by γ, increases the equilibrium levels of M*, H*, C* and Y*. An increase in the marginal

impacts of actual consumption and migration on consumption variation, given

respectively by a and b, decrease income. Changes in a do not affect H* and M* and

decrease C*. Changes in b do not affect C*, but decrease M* and H*.

3. Concluding Remarks

This paper analyzes permanent migrations, such as the Gypsies’, by the formation

of migration habits. The history of the Gypsies, at least in western Europe, is

characterized by constant migration, which makes it difficult to explain it relying solely

on economic reasons or forced expulsions. Actually, one of the main characteristics of

Gypsies is their continual mobility. The permanent migration behavior becomes a trait of

the people, it becomes a habit. By modeling the formation of this habit in a simple

dynamic setup this paper describes the determination of migration and migration habits as

well as the consumption pattern and income determination of the Gypsies.

It is shown that an increase in the importance of migration habits and in the

relative importance of recent migration in habit formation increase the steady state

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equilibrium value of migration, migration habits, consumption and income. While an

increase in the Gypsies’ rate of time preference decrease these equilibrium values.

Appendix:

Comparative statics analysis:

0*

;0*

;0*

;0*

;0*

=<>><da

dMd

dMd

dMd

dMdb

dMθγρ

0*

;0*

;0*

;0*

;0*

=<>><da

dHd

dHd

dHd

dHdb

dHθγρ

0*

;0*

;0*

;0*

;0*

=<>><db

dCd

dCd

dCd

dCda

dCθγρ

0*

;0*

;0*

;0*

;0*

<<>><da

dYd

dYd

dYd

dYdb

dYθγρ

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