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On the Mechanics of Migration Decisions; Skill Complementarities and Endogenous Price Differentials

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  • Mariassunta Giannetti

    (Banca d'Italia)

Abstract

Why are skilled workers more mobile than average? What determines positive migration flows toward relatively poorer regions or states of a country? How can one explain the sharp decrease in the mobility rate observed within European countries notwithstanding persistent regional disparities? This paper aims to answer these questions using skill complementarities and endogenous price differentials between the richest and the poorest regions. If the skill premium is increasing in the average level of human capital of a location, and the price of non-traded goods is higher in the more human capital intensive regions, the more skilled the workers are, the stronger are the economic incentives to migrate towards the richest regions. In contrast, the least skilled workers have an incentive to migrate to the poorest regions to minimize their living costs. In this context, interregional cost-of-living differentials arise endogenously if the selfselection of migrants affects total factor productivity in the traded goods sector, as pointed out by Balassa (1964) and Samuelson (1964). Moreover, if the process of capital accumulation provokes faster convergence in interregional wage differentials than in living costs, convergence in per capita GDP may hinder migration to the richest regions, even if it leaves large regional disparities.

Suggested Citation

  • Mariassunta Giannetti, 2000. "On the Mechanics of Migration Decisions; Skill Complementarities and Endogenous Price Differentials," Temi di discussione (Economic working papers) 366, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_366_00
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    References listed on IDEAS

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    Cited by:

    1. Luis Armando Galvis, 2002. "Determinantes de la migración interdepartamental en Colombia, 1988 - 1993," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, June.
    2. Dequiedt, Vianney & Zenou, Yves, 2013. "International migration, imperfect information, and brain drain," Journal of Development Economics, Elsevier, vol. 101(C), pages 117-132.
    3. Stepán Jurajda & Katherine Terrell, 2009. "Regional unemployment and human capital in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 241-274, April.
    4. Milo Bianchi, 2013. "Immigration Policy and Self-Selecting Migrants," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(1), pages 1-23, February.
    5. Haußen, Tina & Haussen, Tina, 2016. "Job Changes and Interregional Migration of Graduates," Annual Conference 2016 (Augsburg): Demographic Change 145618, Verein für Socialpolitik / German Economic Association.
    6. Fu, Yuming & Gabriel, Stuart A., 2012. "Labor migration, human capital agglomeration and regional development in China," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 473-484.
    7. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics.
    8. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.
    9. Udo Kreickemeier & Jens Wrona, 2017. "Two-Way Migration between Similar Countries," The World Economy, Wiley Blackwell, vol. 40(1), pages 182-206, January.
    10. Saracoglu, Durdane Sirin & Roe, Terry L., 2015. "Internal Migration, Structural Change, and Economic Growth," 2015 Conference, August 9-14, 2015, Milan, Italy 212690, International Association of Agricultural Economists.
    11. Michal Franta & Martin Guzi, 2008. "Unequal Access to Higher Education in the Czech Republic: The Role of Spatial Distribution of Universities," CERGE-EI Working Papers wp350, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    12. Nikolaj Malchow-Møller & Jakob R. Munch & Jan Rose Skaksen, 2011. "Do Foreign Experts Increase the Productivity of Domestic Firms?," Norface Discussion Paper Series 2011014, Norface Research Programme on Migration, Department of Economics, University College London.
    13. Alexander Muravyev, 2006. "Human Capital Externalities: Evidence from the Transition Economy of Russia," Discussion Papers of DIW Berlin 629, DIW Berlin, German Institute for Economic Research.
    14. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2015. "Job Search, Locus of Control, and Internal Migration," IZA Discussion Papers 9600, Institute for the Study of Labor (IZA).
    15. Ishwarya Balasubramanian, 2016. "Local skill concentrations and district employment growth: a simultaneous equation approach for India," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 491-511, March.
    16. Dinh, Huong & Pearson, Leonie, 2015. "Specifying community economic resilience - a framework for measurement," 2015 Conference (59th), February 10-13, 2015, Rotorua, New Zealand 202523, Australian Agricultural and Resource Economics Society.
    17. Ugo Fratesi, 2014. "Editorial: The Mobility of High-Skilled Workers - Causes and Consequences," Regional Studies, Taylor & Francis Journals, vol. 48(10), pages 1587-1591, October.
    18. Sorek, Gilad, 2009. "Migration costs, commuting costs and intercity population sorting," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 377-385, July.
    19. Kang-Rae Ma & Eun-Taek Kang & O-Kyu Kwon, 2017. "Migration behavior of students and graduates under prevailing regional dualism: the case of South Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 209-233, January.
    20. Yuming Fu & Yang Hao, 2015. "An Urban Accounting for Geographic Concentration of Skills and Welfare Inequality," ERSA conference papers ersa15p734, European Regional Science Association.
    21. Elisabetta Marinelli, 2011. "Graduate migration in Italy - Lifestyle or necessity?," ERSA conference papers ersa11p1608, European Regional Science Association.

    More about this item

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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