3 Principles governing immigration behavior of workers and businesses
The market wage rate is determined by Supply and Demand for Labor;
by extension, at the intersection of the Supply and Demand curve(s) for labor.
Principle 1: The price signal governs the allocation of resources in the economy.
If PB > PA i.e. the going price for some item or resource is higher in market B vs in market A , supply of the resource flows from A to B (i.e. from region of lower price to region of higher price) by the action of self-interest pursuing decision-making agents guided by incentive
^ all this assumes "ideal" or competitive market conditions.
Example of relevance : a preliminary explanation for existence of labor migration.
When the resource is human labor / effort / time the price for this particular factor of production has an alternate name viz. "wage".
When wage in a market (B) is more than in the other market (A), laborers immigrate from the region with lower wage to region with higher wage (i.e. from A to B)
When there is no wage / price differential, there is no incentive for laborers to migrate;
implying that if both countries have the same wage Wo then there will be no migration.
Now imagine a hypothetical situation where both provinces A and B produce the same item and have the same production technology . . . . BUT the catch is that the production process is such that whichever country it's in, each and every native worker of the country has to be "paired" with an immigrant worker to produce output. In other words natives and immigrants are "perfect complements" in production, and immigration between the provinces is "frictionless" i.e. costless.
Now the situation is complicated since a firm owner - in either province - is not willing to pay a native worker alone since a native worker alone is useless i.e. the firm would pay both the native (s) and the immigrant (s); if there was an immigrant available for every native, then the entire native labor force would be employed.
Supporting intuition: Given identical production technology whichever country has higher capital stock will also have higher Marginal Product of Labor (MPL) and hence higher wage at identical levels of absolute labor employment
Principle 2: Ceteris paribus productive resources will flow from region with relative scarcity of complementary inputs (here capital) to region with relative abundance of complementary inputs (capital) because the productive resources are more productive where complementary inputs are more abundant.
and, assuming both countries have equal population strength starting out, that country with higher capital stock and / or better state of technology (technology is a special kind of capital, called knowledge capital) will see the most incoming immigration i.e. laborers migrating to it
Example of relevance: a preliminary explanation for the direction of labor migration
e.g. if B is more technologically advanced than A then the dominant trend in immigration will be that laborers will move away from A and move to B
Imagine a second situation still.
Instead of being "complementary" in production now each native worker and immigrant - in whichever country - are "substitutes" i.e. as far as production is concerned there are only "workers" and the type of a worker, native vs immigrant, is irrelevant.
BUT now there is no labor migration allowed. (Btw this means that in each country there aren't any "immigrants" so to speak: each of A's workers is as good as each of B's workers, that's all)
Now only the producers / businesses / firms / entrepreneurs can move. (It was implicit for the last two sections that only labor could migrate, firms couldn't.)
Assuming producers have the identical capital stock and identical technology (i.e. same level of knowledge capital) then producers will move from region of low labor efficiency to region of high labor efficiency - say, from B to A - because producing with inefficient labor means higher production cost per unit compared to competing producer, which means certain bankruptcy since everybody wants to buy at the cheapest price.
One way Labor Efficiency is increased is by investing into what is called human capital. Human capital is enriched through effective education and diversity of cultural exposure, as well as improvements in nutritional standards, public healthcare infrastructure etc.
Another way Labor Efficiency is increased is by investing into public overhead capital. Think cellular and Internet connection that is fast, reliable and widely accessible; public transportation facilities; road coverage . . . and other public goods which are typically ascribed to be the responsibility of the Government sector.
So we could state the third principle as
Principle 3: Ceteris paribus industrial development and focus of business activity - including entrepreneurship - flows away from regions with lower level of labor productivity (i.e. lower human + public capital) ; to regions with higher level of labor productivity human capital (i.e. greater stock of human + public capital)
Example of relevance : a preliminary explanation for why business and entrepreneurial activity evade certain regions despite no shortage of well-intentioned efforts.