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Location-Specific Human Capital, Location Choice and Amenity Demand

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  • Krupka, Douglas J.

    (University of Michigan)

Abstract

The role of amenities in the flow of migrants has been debated for some years. This paper advances an original model of amenities that work through household production instead of directly through the utility function. Area characteristics (amenities) affect household production, causing certain kinds of human capital investments to be rewarded more than others. Area heterogeneity makes such investments location-specific, in that some areas’ characteristics will reward certain kinds of knowledge more than others. This specificity – along with a period of exogenous location (before migration can be carried out) – increases the opportunity costs of moving, diminishes migration flows between dissimilar locations and increases valuation of amenities which were present in the originating area. These theoretical results emphasize people’s sorting across areas and thus differ from the results of the standard model of compensating differentials. Empirical tests of the model’s predictions using NLSY79 data show that childhood investments affect migration flows in the way proposed by the model.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2987.

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Length: 32 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2987

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Keywords: location specificity; migration; amenities; human capital;

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Cited by:
  1. Enrico Moretti, 2008. "Real Wage Inequality," Working Paper Series 34-08, The Rimini Centre for Economic Analysis, revised Jan 2008.
  2. Devin Bunten & Matthew E. Kahn, 2014. "The Impact of Emerging Climate Risks on Urban Real Estate Price Dynamics," NBER Working Papers 20018, National Bureau of Economic Research, Inc.
  3. Peter Huber & Klaus Nowotny & Julia Bock-Schappelwein, 2010. "Qualification Structure, Over- and Underqualification of the Foreign Born in Austria and the EU," FIW Research Reports series II-008, FIW.
  4. Klaus Nowotny, 2011. "Welfare Magnets, Taxation and the Location Decisions of Migrants to the EU," WIFO Working Papers 393, WIFO.
  5. Rickard Sandell, 2011. "The migration flux: Understanding international immigration through internal migration," Working Papers 2011-20, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  6. Winters, John V, 2010. "Human Capital and Population Growth in Non-Metropolitan U.S. Counties: The Importance of College Student Migration," MPRA Paper 25592, University Library of Munich, Germany.

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