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

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  • Bayer, Christian

    ()
    (University of Bonn)

  • Juessen, Falko

    ()
    (University of Wuppertal)

Abstract

This paper develops a tractable dynamic microeconomic 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 persistency of migration incentives. Keeping track of the distribution of migration incentives over time has important consequences for the econometrical treatment, because the dynamics of this distribution influences the estimation of structural parameters, such as migration costs. For US interstate migration, we obtain a cost estimate of less than one-half of an average annual household income. This is substantially smaller than the migration costs estimated by previous studies. We attribute this difference to the treatment of the dynamic self-selection problem.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3330.

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Length: 44 pages
Date of creation: Feb 2008
Date of revision:
Publication status: published in: Review of Economic Dynamics, 2012, 15 (3), 377-401
Handle: RePEc:iza:izadps:dp3330

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Keywords: indirect inference; dynamic self-selection; migration;

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Citations

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Cited by:
  1. Plamen Nenov, 2013. "Regional Mismatch and Labor Reallocation in an Equilibrium Model of Migration," 2013 Meeting Papers 565, Society for Economic Dynamics.
  2. Keisuke Kawata & Kentaro Nakajima & Yasuhiro Sato, 2013. "Analyzing the impact of labor market integration," IDEC DP2 Series 3-7, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
  3. Jordan Rappaport, 2012. "Why does unemployment differ persistently across metro areas?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II.
  4. Juessen, Falko & Linnemann, Ludger, 2012. "Identifying Regional Labor Demand Shocks Using Sign Restrictions," IZA Discussion Papers 6767, Institute for the Study of Labor (IZA).
  5. Lkhagvasuren, Damba, 2014. "Education, mobility and the college wage premium," European Economic Review, Elsevier, vol. 67(C), pages 159-173.
  6. Nikolay Gospodinov & Damba Lkhagvasuren, 2011. "A Moment-Matching Method for Approximating Vector Autoregressive Processes by Finite-State Markov Chains," Working Papers 11005, Concordia University, Department of Economics, revised 16 Dec 2011.
  7. 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.
  8. López Real, Joel, 2011. "Family reunification or point-based immigration system? The case of the United States and Mexico," Economics Discussion Papers 2011-27, Kiel Institute for the World Economy.
  9. Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Understanding the Long-Run Decline in Interstate Migration," NBER Working Papers 18507, National Bureau of Economic Research, Inc.
  10. Joel López Real, 2011. "Family reunification or point-based immigration system? The case of the U.S. and Mexico," Working Papers 2011/19, Institut d'Economia de Barcelona (IEB).

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