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A generalized options approach to aggregate migration with an application to US federal states

Author

Listed:
  • Christian Bayer

    (Department of Economics University of Dortmund)

  • Falko Juessen

Abstract

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 to deal with dynamic self-selection problems that arises from the endogeneity of location choice and the persistency of migration incentives. Keeping track of the distribution dynamics of migration incentives has important consequences, because these dynamics influences the estimation of structural parameters, such as migration costs. For US interstate migration, we obtain a cost estimate of approximately two average annual household incomes. This is at most half of the migration cost estimates reported in previous studies. We attribute this difference to the treatment of the self selection problem

Suggested Citation

  • Christian Bayer & Falko Juessen, 2006. "A generalized options approach to aggregate migration with an application to US federal states," 2006 Meeting Papers 656, Society for Economic Dynamics.
    • Handle: RePEc:red:sed006:656
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    Citations

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    Cited by:

    1. Dahl, Michael S. & Sorenson, Olav, 2010. "The migration of technical workers," Journal of Urban Economics, Elsevier, vol. 67(1), pages 33-45, January.

    More about this item

    Keywords

    Self selection; migration; indirect inference; dynamic optimization;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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