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Labor Reallocation over the Business Cycle: New Evidence from Internal Migration

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  • Saks, Raven E.

    ()
    (Federal Reserve Board)

  • Wozniak, Abigail

    ()
    (University of Notre Dame)

Abstract

This paper establishes the cyclical properties of a novel measure of worker reallocation: long-distance migration rates within the US. This internal migration offers a bird’s eye view of worker reallocation in the economy as long-distance migrants often change jobs or employment status, altering the spatial allocation of labor. Using historical reports of the Current Population Survey (CPS), we examine gross migration patterns during the entire postwar era, a period that spans ten recessions over more than fifty years. We obtain additional evidence on inter-state and inter-metropolitan population flows during the past thirty years from statistics compiled by the Internal Revenue Service. We find that internal migration within the US is strongly procyclical in both sources. Even after accounting for variation in relative local economic conditions, migration is lower during downturns in the national economy. Using individual-level CPS data, we find that migration is procyclical for most major demographic and labor force groups, although it is strongest for younger workers. Our findings suggest that cyclical fluctuations in internal migration are driven by economy-wide changes in the net cost to worker reallocation with a major role for the job finding rate of young workers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2766.

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Length: 50 pages
Date of creation: Apr 2007
Date of revision:
Publication status: published in: Journal of Labor Economics, 2011, 29 (4). 697 - 739
Handle: RePEc:iza:izadps:dp2766

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Keywords: internal migration; worker reallocation; business cycles; procyclical migration;

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References

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  1. Robert B. Barsky & Gary Solon, 1989. "Real Wages Over The Business Cycle," NBER Working Papers 2888, National Bureau of Economic Research, Inc.
  2. Ricardo J. Caballero & Mohamad L. Hammour, 2001. "The Cost of Recessions Revisited : A Reverse-Liquidationist View," DELTA Working Papers, DELTA (Ecole normale supérieure) 2001-05, DELTA (Ecole normale supérieure).
  3. Damba Lkhagvasuren, 2005. "Big Locational Differences in Unemployment Despite High Labor Mobility," Working Papers, Concordia University, Department of Economics 12002, Concordia University, Department of Economics, revised Feb 2012.
  4. Timothy J. Bartik, . "Who Benefits from Local Job Growth: Migrants or Original Residents?," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research tjb1993rs, W.E. Upjohn Institute for Employment Research.
  5. Ramey, Garey & Shigeru Fujita, 2006. "The Cyclicality of Job Loss and Hiring," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt4nz8p839, Department of Economics, UC San Diego.
  6. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(3), pages 3-26, Summer.
  7. Solon, Gary & Barsky, Robert & Parker, Jonathan A, 1994. "Measuring the Cyclicality of Real Wages: How Important Is Composition Bias?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(1), pages 1-25, February.
  8. Robert E. Hall, 2003. "Modern Theory of Unemployment Fluctuations: Empirics and Policy Applications," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 145-150, May.
  9. Bruce Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2004-34, Board of Governors of the Federal Reserve System (U.S.).
  10. Robert E. Hall, 2005. "Job Loss, Job Finding, and Unemployment in the U.S. Economy Over the Past Fifty Years," NBER Working Papers 11678, National Bureau of Economic Research, Inc.
  11. Robert Shimer, 2007. "Mismatch," American Economic Review, American Economic Association, American Economic Association, vol. 97(4), pages 1074-1101, September.
  12. 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.
  13. Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009. "The Ins and Outs of Cyclical Unemployment," American Economic Journal: Macroeconomics, American Economic Association, American Economic Association, vol. 1(1), pages 84-110, January.
  14. Michael Pries, 2008. "Worker Heterogeneity and Labor Market Volatility in Matching Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 664-678, July.
  15. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 739-55, September.
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