The Role of Expectations: An Application to Internal Migration
AbstractThis paper examines the impact of unemployment on migration. In a theoretical model, we show that unemployment, per se, does not affect migration. Rather, migration only occurs when unemployment shocks force residents to update their expectations of the area's unemployment rate. Once these expectations change, migration reallocates labor to bring the economy back to equilibrium. To test this theory, we devise an empirical strategy using state level data in the U.S. from 2000 to 2010, we find strong empirical evidence that unemployment shocks outside of expectations have a far greater impact on migration than unemployment shocks that are within expectations.
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Bibliographic InfoPaper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 1205.
Length: 23 pages
Date of creation: Dec 2012
Date of revision:
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Web page: http://www.holycross.edu/departments/economics/website/
More information through EDIRC
Migration; unemployment; expectations;
Find related papers by JEL classification:
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-08 (All new papers)
- NEP-GEO-2013-02-08 (Economic Geography)
- NEP-MIG-2013-02-08 (Economics of Human Migration)
- NEP-URE-2013-02-08 (Urban & Real Estate Economics)
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.:
- Paul S. Davies & Michael J. Greenwood & Haizheng Li, 2001. "A Conditional Logit Approach to U.S. State-to-State Migration," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 337-360.
- Greenwood, Michael J, 1975. "Research on Internal Migration in the United States: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(2), pages 397-433, June.
- Raven E. Saks & Abigail Wozniak, 2007.
"Labor reallocation over the business cycle: new evidence from internal migration,"
Finance and Economics Discussion Series
2007-32, Board of Governors of the Federal Reserve System (U.S.).
- Raven E. Saks & Abigail Wozniak, 2011. "Labor Reallocation over the Business Cycle: New Evidence from Internal Migration," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 697 - 739.
- Saks, Raven E. & Wozniak, Abigail, 2007. "Labor Reallocation over the Business Cycle: New Evidence from Internal Migration," IZA Discussion Papers 2766, Institute for the Study of Labor (IZA).
- Abigail Wozniak, 2010. "Are College Graduates More Responsive to Distant Labor Market Opportunities?," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 944-970.
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