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The Determinants of Declining Internal Migration

Author

Listed:
  • William W. Olney

    (Williams College)

  • Owen Thompson

    (Williams College)

Abstract

"Internal migration in the United States has declined substantially over the past several decades, which has important implications for individual welfare and macroeconomic adjustment. This paper studies the determinants of internal migration and how they have changed over time. We use administrative data from the IRS covering the universe of bilateral moves between every Commuting Zone (CZ) in the country over a 23 year period. This data is linked to information on local wage levels and home prices, and we estimate bilateral migration determinants in rich regression specifications that contain CZ-pair fixed effects. Consistent with theoretical predictions, we find that migration is decreasing with origin wages and destination home prices, and is increasing with destination wages and origin home prices. We then examine the contributions of earnings and home prices to the noted overall decline in internal migration. These analyses show that wages on their own would have led to an increase in migration rates, primarily because migrants are increasingly responsive to high earnings levels in potential destination CZs. However, these wage effects have been more than offset by housing related factors, which have increasingly impeded internal mobility. In particular, migration has become much less responsive to housing prices in the origin CZ, such that many households that would have left in response to high home prices several decades ago now choose to stay. "

Suggested Citation

  • William W. Olney & Owen Thompson, 2025. "The Determinants of Declining Internal Migration," Department of Economics Working Papers 2025_116, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2025_116
    DOI: 10.36934/wecon:2025_116
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    Cited by:

    1. is not listed on IDEAS
    2. Croce, Giuseppe & Piselli, Paolo, 2024. "Are the best jobs created in largest cities? Evidence from Italy 1993-2016," MPRA Paper 121228, University Library of Munich, Germany.
    3. Angela S. Bergantino & Antonello Clemente & Stefano Iandolo & Riccardo Turati, 2025. "Shaped by Urban-Rural Divide and Skill: the Drivers of Internal Mobility in Italy," Working Papers wpdea2513, Department of Applied Economics at Universitat Autonoma of Barcelona.
    4. Asquith, Brian J. & Mast, Evan, 2025. "Birth dearth and local population decline," Regional Science and Urban Economics, Elsevier, vol. 115(C).
    5. Gordon H. Hanson & Enrico Moretti, 2025. "Where Have All the Good Jobs Gone? Changes in the Geography of Work in the US, 1980-2021," NBER Working Papers 33631, National Bureau of Economic Research, Inc.

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    Keywords

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    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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