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Wages, welfare benefits and migration

  • Kennan, John
  • Walker, James R.

Differences in economic opportunities give rise to strong migration incentives, across regions within countries, and across countries. In this paper we focus on responses to differences in welfare benefits across States within the United States. We apply the model developed in Kennan and Walker (2008), which emphasizes that migration decisions are often reversed, and that many alternative locations must be considered. We model individual decisions to migrate as a job search problem. A worker starts the life-cycle in some home location and must determine the optimal sequence of moves before settling down. The model is sparsely parameterized. We estimate the model using data from the National Longitudinal Survey of Youth (1979). Our main finding is that income differences do help explain the migration decisions of young welfare-eligible women, but large differences in benefit levels provide surprisingly weak migration incentives.

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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 156 (2010)
Issue (Month): 1 (May)
Pages: 229-238

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Handle: RePEc:eee:econom:v:156:y:2010:i:1:p:229-238
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

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  1. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
  2. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, 01.
  3. Susumu Imai & Michael P. Keane, 2004. "Intertemporal Labor Supply and Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 601-641, 05.
  4. Robert Kaestner & Neeraj Kaushal & Gregg Van Ryzin, 2001. "Migration Consequences of Welfare Reform," NBER Working Papers 8560, National Bureau of Economic Research, Inc.
  5. Liu, Haiyong & Mroz, Thomas A. & van der Klaauw, Wilbert, 2010. "Maternal employment, migration, and child development," Journal of Econometrics, Elsevier, vol. 156(1), pages 212-228, May.
  6. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part I: Lessons from a Simulation Exercise," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 570-599.
  7. P. B. Levine & D. J. Zimmerman, . "An empirical analysis of the welfare magnet debate using the NLSY," Institute for Research on Poverty Discussion Papers 1098-96, University of Wisconsin Institute for Research on Poverty.
  8. Jonah B. Gelbach, 2004. "Migration, the Life Cycle, and State Benefits: How Low Is the Bottom?," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1091-1130, October.
  9. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
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