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

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  • Christian Bayer

    (University of Bonn)

  • Falko Juessen

    (University of Dortmund)

Abstract

This paper develops a dynamic structural 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 persistence of migration incentives. The self-selection problem is solved by keeping track of the distribution of migration incentives over time. This econometric treatment has important consequences for the estimation of structural parameters such as migration costs. For US interstate migration, we obtain a cost estimate of roughly two-thirds of an average annual household income. We also show that the treatment of income persistence has important consequences for comparative statics of the model as well as microeconomic age patterns of migration. (Copyright: Elsevier)

Suggested Citation

  • Christian Bayer & Falko Juessen, 2012. "On the Dynamics of Interstate Migration: Migration Costs and Self-Selection," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 377-401, July.
    • Handle: RePEc:red:issued:10-90
    DOI: 10.1016/j.red.2012.02.002
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    More about this item

    Keywords

    Dynamic self-selection; Dynamic discrete choise; Aggregate migration; Indirect inference;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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