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 to deal with dynamic self-selection problems that arises from the endogeneity of location choice and the persistency of migration incentives. Keeping track of the distribution dynamics of migration incentives has important consequences, because these dynamics influences the estimation of structural parameters, such as migration costs. For US interstate migration, we obtain a cost estimate of approximately two average annual household incomes. This is at most half of the migration cost estimates reported in previous studies. We attribute this difference to the treatment of the self selection problem
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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number
656.
Length: Date of creation: 03 Dec 2006 Date of revision: Handle: RePEc:red:sed006:656
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