Working Paper: CEPR ID: DP1945
Authors: Gavin Cameron; John Muellbauer
Abstract: Inter-regional migration is influenced by relative employment and earnings opportunities. But strongly offsetting forces operate from relative house prices. Commuting, at least to contiguous regions, is often an alternative to migration. Relative employment and earnings opportunities should influence commuting rates in the same direction as migration rates. Given the commute/migrate trade-off, however, housing market forces should operate in the opposite direction, particularly for contiguous regions. This paper presents evidence on inter-regional commuting and migration in Great Britain which is broadly in accord with these expectations. Data for the 1980s and 1990s on net commuting are derived from the ratios of numbers of employees resident in a region to the number employed in that region using Labour Force Survey and Census of Employment data. Information on migration comes from the National Health Service Central Register. Given the evidence for the importance of portfolio demand and speculative volatility in the British housing market presented in Muellbauer and Murphy (1997), this paper documents the important transmission effects via regional labour markets, for example, increasing regional mismatch, of the forces that drive house prices in Britain. The paper suggests tax reforms which should ameliorate these problems.
Keywords: Regional migration; Regional commuting; Housing markets; Labour market mismatch
JEL Codes: J61; J68; R21; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high relative earnings and employment opportunities (J68) | migration to a region (R23) |
| high relative house prices (R31) | migration to a region (R23) |
| housing market inefficiencies (R31) | labor market mismatches (J68) |
| labor market mismatches (J68) | migration patterns (F22) |
| relative labor market conditions (J29) | commuting rates (R48) |
| housing market conditions (R31) | commuting rates (R48) |
| housing market conditions (R31) | regional labor market dynamics (J69) |
| tax reforms (H29) | housing market issues (R31) |