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

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  • Bayer, Christian
  • Juessen, Falko

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 us to deal with dynamic self-selection problems that arise from the endogeneity of location choice and the persistency of migration incentives. Keeping track of 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 di¤erence to the treatment of the dynamic self-selection problem.

Suggested Citation

  • Bayer, Christian & Juessen, Falko, 2006. "On the Dynamics of Interstate Migration: Migration Costs and Self-Selection," Technical Reports 2006,38, Technische Universität Dortmund, Sonderforschungsbereich 475: Komplexitätsreduktion in multivariaten Datenstrukturen.
  • Handle: RePEc:zbw:sfb475:200638
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    Cited by:

    1. Andrew Sweeting, 2007. "Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry," NBER Working Papers 13522, National Bureau of Economic Research, Inc.
    2. Yuliya Demyanyk & Dmytro Hryshko & María Jose Luengo-Prado & Bent E. Sørensen, 2017. "Moving to a Job: The Role of Home Equity, Debt, and Access to Credit," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(2), pages 149-181, April.
    3. Plamen Nemov, 2015. "Regional Reallocation and Housing Markets in a Model of Frictional Migration," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 863-880, October.
    4. repec:wly:iecrev:v:58:y:2017:i::p:57-94 is not listed on IDEAS
    5. Nikolay Gospodinov & Damba Lkhagvasuren, 2014. "A Moment‐Matching Method For Approximating Vector Autoregressive Processes By Finite‐State Markov Chains," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(5), pages 843-859, August.
    6. Pei-Ju Liao & Ping Wang & Yin-Chi Wang & Chong Kee Yip, 2017. "Educational Choice, Rural-urban Migration and Economic Development," NBER Working Papers 23939, National Bureau of Economic Research, Inc.
    7. López Real, Joel, 2011. "Family reunification or point-based immigration system? The case of the United States and Mexico," Economics Discussion Papers 2011-27, Kiel Institute for the World Economy (IfW).
    8. Greg Kaplan & Sam Schulhofer‐Wohl, 2017. "Understanding The Long‐Run Decline In Interstate Migration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 57-94, February.
    9. Parkhomenko, Andrii, 2016. "Opportunity to Move: Macroeconomic Effects of Relocation Subsidies," MPRA Paper 75256, University Library of Munich, Germany.
    10. Alm, James & Enami, Ali, 2017. "Do government subsidies to low-income individuals affect interstate migration? Evidence from the Massachusetts Health Care Reform," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 119-131.
    11. Lkhagvasuren, Damba, 2014. "Education, mobility and the college wage premium," European Economic Review, Elsevier, vol. 67(C), pages 159-173.
    12. Keisuke Kawata & Kentaro Nakajima & Yasuhiro Sato, 2013. "Analyzing the impact of labor market integration," Discussion Papers in Economics and Business 13-28, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    13. Yin-Chi Wang & Ping Wang & Chong Yip & Pei-Ju Liao, 2017. "Educational Choice, Rural-urban Migration and Economic Development: The Role of Zhaosheng in China," 2017 Meeting Papers 738, Society for Economic Dynamics.
    14. John Kennan & James R. Walker, 2013. "Modeling individual migration decisions," Chapters,in: International Handbook on the Economics of Migration, chapter 2, pages 39-54 Edward Elgar Publishing.
    15. Sebastian Kessing & Vilen Lipatov & Jens Malte Zoubek, 2014. "Optimal Taxation under Regional Inequality," CESifo Working Paper Series 5152, CESifo Group Munich.
    16. Amior, Michael, 2015. "Why are higher skilled workers more mobile geographically?: the role of the job surplus," LSE Research Online Documents on Economics 61279, London School of Economics and Political Science, LSE Library.
    17. Hansen, Jörgen & Lkhagvasuren, Damba, 2015. "New Evidence on Mobility and Wages of the Young and the Old," IZA Discussion Papers 9258, Institute for the Study of Labor (IZA).
    18. Jordan Rappaport, 2012. "Why does unemployment differ persistently across metro areas?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II.
    19. Braun, Sebastian & Weber, Henning, 2016. "How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany," Kiel Working Papers 2025, Kiel Institute for the World Economy (IfW).
    20. Mauro Lanati & Alessandra Venturini, 2017. "The Import of “cultural goods” and emigration: an unexplored relation," RSCAS Working Papers 2017/24, European University Institute.
    21. Michael Amior & Alan Manning, 2015. "The Persistence of Local Joblessness," CEP Discussion Papers dp1357, Centre for Economic Performance, LSE.
    22. Michael Amior, 2015. "Why are Higher Skilled Workers More Mobile Geographically? The Role of the Job Surplus," CEP Discussion Papers dp1338, Centre for Economic Performance, LSE.
    23. KAWATA Keisuke & NAKAJIMA Kentaro & SATO Yasuhiro, 2014. "Competitive Search with Moving Costs," Discussion papers 14052, Research Institute of Economy, Trade and Industry (RIETI).
    24. Juessen, Falko & Linnemann, Ludger, 2012. "Identifying Regional Labor Demand Shocks Using Sign Restrictions," IZA Discussion Papers 6767, Institute for the Study of Labor (IZA).
    25. Joel López Real, 2011. "Family reunification or point-based immigration system? The case of the U.S. and Mexico," Working Papers 2011/19, Institut d'Economia de Barcelona (IEB).

    More about this item

    Keywords

    Dynamic self-selection; migration; indirect inference;

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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