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Can migration decisions be affected by income taxation policies?

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  • Mika Haapanen

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  • Jari Ritsilä

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Abstract

In this empirical paper we examine whether or not migration decisions can be affected by individual measures of regional policy. To shed light on the question, we study formation of expected earnings and effect of expected earnings on interregional migration decisions in Finland. We consider how this effect varies among individuals, especially among employees in medical and health care sector and in teaching sector. We generated expected earnings in migration and staying alternatives from an endogenous switching regression. These expected earnings were used as additional explanatory variables in a random parameter logit migration model. In the migration model individual can choose between three alternatives: (s)he can either (i) stay in current region, (ii) migrate to a peripheral region, or (iii) migrate to a growth-centre region. The random parameter logit model allows us to specify the impact of expected earning as a function of occupational dummies and other variables, including a random factor. Our estimation results on a one-percent random sample from the Finnish longitudinal census file indicate that a decision to move is influenced by expected earnings, but the impact is dependent, for example, on occupational and educational group and on region of origin.

Suggested Citation

  • Mika Haapanen & Jari Ritsilä, 2001. "Can migration decisions be affected by income taxation policies?," ERSA conference papers ersa01p41, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa01p41
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    References listed on IDEAS

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    1. 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.
    2. Jain, Dipak C & Vilcassim, Naufel J & Chintagunta, Pradeep K, 1994. "A Random-Coefficients Logit Brand-Choice Model Applied to Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(3), pages 317-328, July.
    3. Poirier, Dale J. & Ruud, Paul A., 1981. "On the appropriateness of endogenous switching," Journal of Econometrics, Elsevier, vol. 16(2), pages 249-256, June.
    4. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-773, October.
    5. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    6. Juan Pablo Juarez, 2000. "Analysis of Interregional Labor Migration in Spain Using Gross Flows," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 377-399.
    7. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    8. Lucas, Robert E.B., 1993. "Internal migration in developing countries," Handbook of Population and Family Economics,in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 13, pages 721-798 Elsevier.
    9. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    10. Weiss, Yoram, 1971. "Learning by doing and occupational specialization," Journal of Economic Theory, Elsevier, vol. 3(2), pages 189-198, June.
    11. Seater, John J., 1977. "A unified model of consumption, labor supply, and job search," Journal of Economic Theory, Elsevier, vol. 14(2), pages 349-372, April.
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    Cited by:

    1. Mika Haapanen & Hannu Tervo, 2006. "Migration Behaviour and Duration of Residence Spells of Graduating Students in Finland in 1987-2002," ERSA conference papers ersa06p379, European Regional Science Association.
    2. Satu Nivalainen, 2003. "Who move to rural areas? Micro Evidence from Finland," ERSA conference papers ersa03p214, European Regional Science Association.
    3. Haapanen, Mika, 2002. "Variation of migration behaviour in population," ERSA conference papers ersa02p283, European Regional Science Association.

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