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Wages, welfare benefits and migration

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  • Kennan, John
  • Walker, James R.

Abstract

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.

Suggested Citation

  • Kennan, John & Walker, James R., 2010. "Wages, welfare benefits and migration," Journal of Econometrics, Elsevier, vol. 156(1), pages 229-238, May.
  • Handle: RePEc:eee:econom:v:156:y:2010:i:1:p:229-238
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    1. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, January.
    2. Phillip B. Levine & David J. Zimmerman, 1999. "An empirical analysis of the welfare magnet debate using the NLSY," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(3), pages 391-409.
    3. 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.
    4. 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.
    5. Kaestner, Robert & Kaushal, Neeraj & Van Ryzin, Gregg, 2003. "Migration consequences of welfare reform," Journal of Urban Economics, Elsevier, vol. 53(3), pages 357-376, May.
    6. 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.
    7. 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.
    8. 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, May.
    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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    Cited by:

    1. Raven E. Saks & Abigail Wozniak, 2011. "Labor Reallocation over the Business Cycle: New Evidence from Internal Migration," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 697-739.
    2. Adnan Efendic, 2016. "Emigration intentions in a post-conflict environment: evidence from Bosnia and Herzegovina," Post-Communist Economies, Taylor & Francis Journals, vol. 28(3), pages 335-352, July.
    3. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, January.
    4. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2005. "A Positive Theory Of Geographic Mobility And Social Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 263-303, February.
    5. Mohammad Arzaghi & Anil Rupasingha, 2013. "Migration As A Way To Diversify: Evidence From Rural To Urban Migration In The U.S," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 690-711, October.
    6. Brice BAROIS, 2020. "Le rôle attractif des industries créatives et culturelles dans la localisation des jeunes en France," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 51, pages 45-64.
    7. McDuff, DeForest, 2011. "Demand substitution across US cities: Observable similarity and home price correlation," Journal of Urban Economics, Elsevier, vol. 70(1), pages 1-14, July.
    8. Saltz, Ira S. & Capener, Don, 2016. "60 Years Later and Still Going Strong: The Continued Relevance of the Tiebout Hypothesis," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(1).
    9. Matthew J. Notowidigdo, 2011. "The Incidence of Local Labor Demand Shocks," NBER Working Papers 17167, National Bureau of Economic Research, Inc.
    10. John Kennan & James R. Walker, 2013. "Modeling individual migration decisions," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 2, pages 39-54, Edward Elgar Publishing.
    11. Jiangsheng Chen & Caixian Cui, 2018. "Large City or Small Town: an Empirical Analysis of the Effects of Migration Strategies of Rural Households on Income in China," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 13(1), pages 211-228, March.
    12. Richard J. Cebula & J. R. Clark, 2013. "An extension of the Tiebout hypothesis of voting with one's feet: the Medicaid magnet hypothesis," Applied Economics, Taylor & Francis Journals, vol. 45(32), pages 4575-4583, November.
    13. Myoung‐Jae Lee & Young‐Sook Kim, 2014. "Difference In Differences For Stayers With A Time‐Varying Qualification: Health Expenditure Elasticity Of The Elderly," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1134-1145, September.
    14. Hartley, Robert Paul & Lamarche, Carlos & Ziliak, James P., 2017. "Welfare Reform and the Intergenerational Transmission of Dependence," IZA Discussion Papers 10942, Institute of Labor Economics (IZA).
    15. Pellegrini, Guido & Tarola, Ornella & Cerqua, Augusto & Ceccantoni, Giulia, 2018. "Can regional policies shape migration flows?," MPRA Paper 87874, University Library of Munich, Germany.
    16. R. Vincent Pohl, 2018. "Medicaid And The Labor Supply Of Single Mothers: Implications For Health Care Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1283-1313, August.

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