On the dynamics of interstate migration: migration costs and self-selection
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Date
2006-11-10T07:44:47Z
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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 difference to the treatment of the dynamic self-selection
problem.
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Keywords
Cost estimation, Dynamic microeconomic model, Dynamic self-selection, Dynamic self-selection problem, Indirect inference, Migration