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Returns to Regional Migration: Causal Effect or Selection on Wage Growth?

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  • Kratz, Fabian
  • Brüderl, Josef

Abstract

Human capital theory predicts pecuniary returns to regional migration, but also positive self-selection of migrants. Therefore, when estimating the causal effect of migration one has to take care of potential self-selection. Several authors recommend using fixed effects models thereby controlling for time constant unobserved heterogeneity. However, if selection operates not only on wage level but also on wage growth conventional fixed effects models are also biased. In this paper we want to investigate, whether migrants are self-selected on wage growth and if this biases conventional fixed effects estimates of the returns to migration. We use data from the SOEP 1984 – 2010. First we analyze the time pattern of the wage differential between migrants and stayers to see whether they are on different wage trajectories. Second we introduce a fixed effects model with individual slopes to investigate whether conventional results are biased.

Suggested Citation

  • Kratz, Fabian & Brüderl, Josef, 2013. "Returns to Regional Migration: Causal Effect or Selection on Wage Growth?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(2), pages 227-238.
  • Handle: RePEc:aeq:aeqsjb:v133_y2013_i2_q2_p227-238
    DOI: 10.3790/schm.133.2.227
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    Cited by:

    1. Oliver Falck & Alfred Lameli & Jens Ruhose, 2018. "Cultural biases in migration: Estimating non‐monetary migration costs," Papers in Regional Science, Wiley Blackwell, vol. 97(2), pages 411-438, June.
    2. Silvia Kopecny & Steffen Hillmert, 2021. "Place of study, field of study and labour-market region: What matters for wage differences among higher-education graduates?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-21, December.
    3. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61, April.

    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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