Working Paper: NBER ID: w9585
Authors: John Kennan; James R. Walker
Abstract: The paper develops a tractable econometric model of optimal migration, focusing on expected income as the main economic influence on migration. The model improves on previous work in two respects: it covers optimal sequences of location decisions (rather than a single once-for-all choice), and it allows for many alternative location choices. The model is estimated using panel data from the NLSY on white males with a high school education. Our main conclusion is that interstate migration decisions are influenced to a substantial extent by income prospects. The results suggest that the link between income and migration decisions is driven both by geographic differences in mean wages and by a tendency to move in search of a better locational match when the income realization in the current location is unfavorable.
Keywords: migration; income; panel data; econometric model
JEL Codes: J6; J1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Expected income (E25) | Interstate migration decisions (R23) |
| Geographic differences in mean wages (J31) | Interstate migration decisions (R23) |
| Negative income shocks (F61) | Increased migration (F22) |