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Wages, welfare benefits and migration

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Author Info

  • Kennan, John
  • Walker, James R.

Abstract

Differences in economic opportunities give rise to strong migration incentives, across regions within countries, and across countries. In this paper we focus on responses to differences in welfare benefits across States within the United States. We apply the model developed in Kennan and Walker (2008), which emphasizes that migration decisions are often reversed, and that many alternative locations must be considered. We model individual decisions to migrate as a job search problem. A worker starts the life-cycle in some home location and must determine the optimal sequence of moves before settling down. The model is sparsely parameterized. We estimate the model using data from the National Longitudinal Survey of Youth (1979). Our main finding is that income differences do help explain the migration decisions of young welfare-eligible women, but large differences in benefit levels provide surprisingly weak migration incentives.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 156 (2010)
Issue (Month): 1 (May)
Pages: 229-238

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Handle: RePEc:eee:econom:v:156:y:2010:i:1:p:229-238

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Web page: http://www.elsevier.com/locate/jeconom

Related research

Keywords: Geographic mobility Welfare Microeconometric;

References

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  1. Robert Kaestner & Neeraj Kaushal & Gregg Van Ryzin, 2001. "Migration Consequences of Welfare Reform," NBER Working Papers 8560, National Bureau of Economic Research, Inc.
  2. P. B. Levine & D. J. Zimmerman, . "An empirical analysis of the welfare magnet debate using the NLSY," Institute for Research on Poverty Discussion Papers 1098-96, University of Wisconsin Institute for Research on Poverty.
  3. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, 01.
  4. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
  5. Liu, Haiyong & Mroz, Thomas A. & van der Klaauw, Wilbert, 2010. "Maternal employment, migration, and child development," Journal of Econometrics, Elsevier, vol. 156(1), pages 212-228, May.
  6. Susumu Imai & Michael P. Keane, 2004. "Intertemporal Labor Supply and Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 601-641, 05.
  7. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part I: Lessons from a Simulation Exercise," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 570-599.
  8. David Card & Dean R. Hyslop, 2004. "Estimating the Effects of a Time Limited Earnings Subsidy for Welfare Leavers," NBER Working Papers 10647, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Matthew J. Notowidigdo, 2011. "The Incidence of Local Labor Demand Shocks," NBER Working Papers 17167, National Bureau of Economic Research, Inc.
  2. Kennan,J. & Walker,J.R., 2003. "The effect of expected income on individual migration decisions," Working papers 7, Wisconsin Madison - Social Systems.
  3. Cebula, Richard & Clark, Jeff, 2012. "An Extension of the Tiebout Hypothesis of Voting with One's Feet: The Medicaid Magnet Hypothesis," MPRA Paper 52431, University Library of Munich, Germany.
  4. John Hassler & José Vicente Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2003. "A Positive Theory of Geographic Mobility and Social Insurance," Working Papers 86, Barcelona Graduate School of Economics.
  5. McDuff, DeForest, 2011. "Demand substitution across US cities: Observable similarity and home price correlation," Journal of Urban Economics, Elsevier, vol. 70(1), pages 1-14, July.
  6. Hal W. Snarr & Daniel Friesner & Mark L. Burkey, 2011. "Unintended Migration Consequences of US Welfare Reform," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 41(3), pages 233-252, December.

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