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Propensity score matching, a distance-based measure of migration, and the wage growth of young men

  • John C. Ham
  • Xianghong Li
  • Patricia B. Reagan
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    This paper estimates the effect of U.S. internal migration on real wage growth between the movers' first and second jobs. Our analysis of migration differs from previous research in three important aspects. First, we exploit the confidential geocoding in the National Longitudinal Surveys of Youth 1979 (NLSY79) to obtain a distance-based measure. Second, we let the effect of migration on wage growth differ by schooling level. Third, we use propensity score matching to measure the effect of migration on the wages of those who move. ; We develop an economic model and use it to (i) assess the appropriateness of matching as an econometric method for studying migration and (ii) choose the conditioning variables used in the matching procedure. Our data set provides a rich array of variables on which to match. We find a significant effect of migration on the wage growth of college graduates of 10 percent and a marginally significant effect for high school dropouts of -12 percent. If we use a measure of migration based on moving across either county lines or state lines, the significant effects of migration for college graduates and dropouts disappear.

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    Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 212.

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    Date of creation: 2005
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    Handle: RePEc:fip:fednsr:212
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    1. Linneman, Peter D. & Graves, Philip E., 1983. "Migration and job change: a multinomial logit approach," MPRA Paper 19922, University Library of Munich, Germany.
    2. Michael Lechner, 2000. "An Evaluation of Public-Sector-Sponsored Continuous Vocational Training Programs in East Germany," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 347-375.
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    4. Heckman, James J. & Navarro, Salvador, 2003. "Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models," IZA Discussion Papers 768, Institute for the Study of Labor (IZA).
    5. Guido Imbens, 2000. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometric Society World Congress 2000 Contributed Papers 1166, Econometric Society.
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    8. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
    9. Kennan,J. & Walker,J.R., 2003. "The effect of expected income on individual migration decisions," Working papers 7, Wisconsin Madison - Social Systems.
    10. Alberto Abadie & Guido W. Imbens, 2006. "On the Failure of the Bootstrap for Matching Estimators," NBER Technical Working Papers 0325, National Bureau of Economic Research, Inc.
    11. Bartel, Ann P, 1979. "The Migration Decision: What Role Does Job Mobility Play?," American Economic Review, American Economic Association, vol. 69(5), pages 775-86, December.
    12. Donald W. K. Andrews & Moshe Buchinsky, 2000. "A Three-Step Method for Choosing the Number of Bootstrap Repetitions," Econometrica, Econometric Society, vol. 68(1), pages 23-52, January.
    13. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
    14. Falaris, Evangelos M, 1987. "A Nested Logit Migration Model with Selectivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(2), pages 429-43, June.
    15. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    16. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
    17. Jinyong Hahn, 1998. "On the Role of the Propensity Score in Efficient Semiparametric Estimation of Average Treatment Effects," Econometrica, Econometric Society, vol. 66(2), pages 315-332, March.
    18. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
    19. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
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    21. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    22. McCall, B P & McCall, J J, 1987. "A Sequential Study of Migration and Job Search," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 452-76, October.
    23. Borjas, George J & Bronars, Stephen G & Trejo, Stephen J, 1992. "Assimilation and the Earnings of Young Internal Migrants," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 170-75, February.
    24. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
    25. Andrews, Donald W. K. & Buchinsky, Moshe, 2001. "Evaluation of a three-step method for choosing the number of bootstrap repetitions," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 345-386, July.
    26. Alberto Abadie & Guido W. Imbens, 2002. "Simple and Bias-Corrected Matching Estimators for Average Treatment Effects," NBER Technical Working Papers 0283, National Bureau of Economic Research, Inc.
    27. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
    28. Chris Robinson & Nigel Tomes, 1982. "Self-Selection and Interprovincial Migration in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 15(3), pages 474-502, August.
    29. Paul E. Gabriel & Susanne Schmitz, 1995. "Favorable Self-Selection and the Internal Migration of Young White Males in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 460-471.
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