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Returns to Regional Migration: Causal Effect or Selection on Wage Growth?

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  • Kratz, Fabian
  • Brüderl, Josef

Abstract

Human capital theory predicts pecuniary returns to regional migration, but also positive self-selection of migrants. Therefore, when estimating the causal effect of migration one has to take care of potential self-selection. Several authors recommend using fixed effects models thereby controlling for time constant unobserved heterogeneity. However, if selection operates not only on wage level but also on wage growth conventional fixed effects models are also biased. In this paper we want to investigate, whether migrants are self-selected on wage growth and if this biases conventional fixed effects estimates of the returns to migration. We use data from the SOEP 1984 – 2010. First we analyze the time pattern of the wage differential between migrants and stayers to see whether they are on different wage trajectories. Second we introduce a fixed effects model with individual slopes to investigate whether conventional results are biased.

Suggested Citation

  • Kratz, Fabian & Brüderl, Josef, 2013. "Returns to Regional Migration: Causal Effect or Selection on Wage Growth?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(2), pages 227-238.
  • Handle: RePEc:aeq:aeqsjb:v133_y2013_i2_q2_p227-238
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    File URL: http://dx.doi.org/10.3790/schm.133.2.227
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    Cited by:

    1. Falck, Oliver & Lameli, Alfred & Ruhose, Jens, 2015. "Cultural Biases in Migration: Estimating Non-Monetary Migration Costs," IZA Discussion Papers 8922, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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