Understanding the Long-Run Decline in Interstate Migration
Author : Greg Kaplan, Sam Schulhofer-Wohl | 2015
Published By: Federal Reserve Bank of Minneapolis
Gross flows of people across states are about 10 times larger than net flows, yet have declined by around 50 percent over the past 20 years. We argue that the fall in migration is due to a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving there, through information technology and inexpensive travel. Micro data on the distribution of earnings and occupations across space provide evidence for the decrease in the geographic specificity of occupations. Other explanations, including compositional changes, regional changes, and the rise in real incomes, do not fit the data. We develop a model to formalize the geographic-specificity and information mechanisms and show that a calibrated version is consistent with cross-sectional and time-series patterns of migration, occupations, and incomes. Our mechanisms can explain at least one-half of the decline in gross migration since 1991.
URL : https://www.minneapolisfed.org/research/wp/wp697.pdf