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On the Dynamics of Interstate Migration: Migration Costs and Self-Selection

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  • Christian Bayer

    (University of Bonn)

  • Falko Juessen

    (University of Dortmund)

Abstract

This paper develops a dynamic structural model of migration decisions that is aggregated to describe the behavior of interregional migration. Our structural approach allows us to deal with dynamic self-selection problems that arise from the endogeneity of location choice and the persistence of migration incentives. The self-selection problem is solved by keeping track of the distribution of migration incentives over time. This econometric treatment has important consequences for the estimation of structural parameters such as migration costs. For US interstate migration, we obtain a cost estimate of roughly two-thirds of an average annual household income. We also show that the treatment of income persistence has important consequences for comparative statics of the model as well as microeconomic age patterns of migration. (Copyright: Elsevier)

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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 15 (2012)
Issue (Month): 3 (July)
Pages: 377-401

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Handle: RePEc:red:issued:10-90

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Keywords: Dynamic self-selection; Dynamic discrete choise; Aggregate migration; Indirect inference;

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Citations

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Cited by:
  1. Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Understanding the Long-Run Decline in Interstate Migration," NBER Working Papers 18507, National Bureau of Economic Research, Inc.
  2. López Real, Joel, 2011. "Family reunification or point-based immigration system? The case of the United States and Mexico," Economics Discussion Papers, Kiel Institute for the World Economy 2011-27, Kiel Institute for the World Economy.
  3. Damba Lkhagvasuren, 2006. "Education, Mobility and the College Wage Premium," Working Papers, Concordia University, Department of Economics 14001, Concordia University, Department of Economics, revised Nov 2013.
  4. Jordan Rappaport, 2012. "Why does unemployment differ persistently across metro areas?," Economic Review, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, issue Q II.
  5. Keisuke Kawata & Kentaro Nakajima & Yasuhiro Sato, 2013. "Analyzing the impact of labor market integration," IDEC DP2 Series, Hiroshima University, Graduate School for International Development and Cooperation (IDEC) 3-7, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
  6. Andrew Sweeting, 2007. "Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry," NBER Working Papers 13522, National Bureau of Economic Research, Inc.
  7. Joel López Real, 2011. "Family reunification or point-based immigration system? The case of the U.S. and Mexico," Working Papers, Institut d'Economia de Barcelona (IEB) 2011/19, Institut d'Economia de Barcelona (IEB).
  8. Juessen, Falko & Linnemann, Ludger, 2012. "Identifying Regional Labor Demand Shocks Using Sign Restrictions," IZA Discussion Papers 6767, Institute for the Study of Labor (IZA).
  9. Nikolay Gospodinov & Damba Lkhagvasuren, 2014. "A Moment‐Matching Method For Approximating Vector Autoregressive Processes By Finite‐State Markov Chains," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 29(5), pages 843-859, 08.
  10. Plamen Nenov, 2013. "Regional Mismatch and Labor Reallocation in an Equilibrium Model of Migration," 2013 Meeting Papers, Society for Economic Dynamics 565, Society for Economic Dynamics.

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