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On the Dynamics of Interstate Migration: Migration Costs and Self-Selection

  • Christian Bayer
  • Falko Juessen

This paper develops a tractable dynamic microeconomic model of migration decisions that is aggregated to describe the behavior of interregional migration. Our structural approach allows us to deal with dynamic self-selection problems that arise from the endogeneity of location choice and the persistency of migration incentives. Keeping track to the distribution of migration incentives over time has important consequences, because the dynamics of this distribution influences the estimation of structural parameters, such as migration costs. For US interstate migration, we obtain a cost estimate of somewhat less than one-half of an average annual household income. This is substantially less than the migration costs estimated by previous studies. We attribute this difference to the treatment of the dynamic self-selection problem.

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Paper provided by University of Dortmund, Department of Economics in its series Discussion Papers in Economics with number 06_03.

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Length: 41 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:mik:wpaper:06_03
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