Understanding Gross Workers Flows Across U.S. States
This paper documents and provides an explanation for the main stylized facts about net and gross workers flows across states in the U.S. While it is generally known that gross flows of population across locations are significantly larger in the United States than within most European countries (see Hassler et al., 2005), there is considerable heterogeneity in gross and net flows across locations within the United States itself. The main purpose of the paper is to test whether a simple general equilibrium search model based on Lucas and Prescott (1974)'s island economy can account for the main stylized facts. The paper builds on work by Blanchard and Katz (1992), who focus only on net, rather than gross, flows of workers and on the partial equilibrium analysis of migration decisions by Kennan and Walker (2005). I start by documenting these facts using the decennial Census of the U.S for the post-WWII period. The latter allows one to determine a respondent's state of residence in the Census year as well as five years before the Census year. This information is used to construct state-level aggregate gross and net flow rates of workers. These flows are adjusted to take into account the different demographic and industrial composition of the workforce across states and differences in other state characteristics, such as size. The key stylized facts are as follows. In the cross-sectional dimension: (1) gross inflow rates are more dispersed than net flow rates, which, in turn, are more dispersed than gross outflow rates. (2) Gross inflow and outflow rates are positively correlated. (3) Gross and net inflow rates are highly positively correlated, while net flow rates and gross outflow rates are uncorrelated. These three facts suggest that reallocation of population within the U.S. occurs mainly through variations in gross inflows (large in fast-growing states and small in slow-growing states), rather than in gross outflows. In other words, states that tend to lose populat
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