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On the Mechanics of Migration Decisions; Skill Complementarities and Endogenous Price Differentials

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Author Info
Mariassunta Giannetti (Banca d'Italia)

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Abstract

Why are skilled workers more mobile than average? What determines positive migration flows toward relatively poorer regions or states of a country? How can one explain the sharp decrease in the mobility rate observed within European countries notwithstanding persistent regional disparities? This paper aims to answer these questions using skill complementarities and endogenous price differentials between the richest and the poorest regions. If the skill premium is increasing in the average level of human capital of a location, and the price of non-traded goods is higher in the more human capital intensive regions, the more skilled the workers are, the stronger are the economic incentives to migrate towards the richest regions. In contrast, the least skilled workers have an incentive to migrate to the poorest regions to minimize their living costs. In this context, interregional cost-of-living differentials arise endogenously if the selfselection of migrants affects total factor productivity in the traded goods sector, as pointed out by Balassa (1964) and Samuelson (1964). Moreover, if the process of capital accumulation provokes faster convergence in interregional wage differentials than in living costs, convergence in per capita GDP may hinder migration to the richest regions, even if it leaves large regional disparities.

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Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number 366.

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Date of creation: Feb 2000
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Handle: RePEc:bdi:wptemi:td_366_00

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. James E. Rauch, 1991. "Reconciling the Pattern of Trade with the Pattern of Migration," NBER Working Papers 3605, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Paolo Mauro & Antonio Spilimbergo, 1998. "How Do the Skilled and the Unskilled Respond to Regional Shocks? The Case of Spain," IMF Working Papers 98/77, International Monetary Fund.
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  8. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May. [Downloadable!] (restricted)
  9. Atkeson, Andrew & Ogaki, Masao, 1996. "Wealth-varying intertemporal elasticities of substitution: Evidence from panel and aggregate data," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 507-534, December. [Downloadable!] (restricted)
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  10. Cooper, Russell & Haltiwanger, John, 1996. "Evidence on Macroeconomic Complementarities," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 78-93, February. [Downloadable!] (restricted)
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  11. Cameron, Gavin & Muellbauer, John, 1998. "The Housing Market and Regional Commuting and Migration Choices," CEPR Discussion Papers 1945, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February. [Downloadable!] (restricted)
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  16. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April. [Downloadable!] (restricted)
  17. Bentolila, Samuel, 1997. "Sticky labor in Spanish regions," European Economic Review, Elsevier, vol. 41(3-5), pages 591-598, April. [Downloadable!] (restricted)
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  18. George J. Borjas & Stephen G. Bronars & Stephen J. Trejo, 1992. "Self-Selection and Internal Migration in the United States," NBER Working Papers 4002, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Antolin, Pablo & Bover, Olympia, 1997. "Regional Migration in Spain: The Effect of Personal Characteristics and of Unemployment, Wage and House Price Differentials Using Pooled Cross-Sections," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 215-35, May.
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  21. Giannetti, Mariassunta, 2002. "The effects of integration on regional disparities: Convergence, divergence or both?," European Economic Review, Elsevier, vol. 46(3), pages 539-567, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bianchi, Milo, 2006. "Immigration Policy and Self-Selecting Migrants," Working Paper Series in Economics and Finance 627, Stockholm School of Economics, revised 02 Nov 2006. [Downloadable!]
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  2. Alexander Muravyev, 2006. "Human Capital Externalities: Evidence from the Transition Economy of Russia," Discussion Papers of DIW Berlin 629, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  3. Stepán Jurajda & Katherine Terrell, 2007. "Regional Unemployment and Human Capital in Transition Economies," IZA Discussion Papers 3176, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics. [Downloadable!]
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