Why are Population Flows so Persistent?
FRB of Kansas City Working Paper No. 99-13
50 Pages Posted: 3 Feb 2000
There are 2 versions of this paper
Why are Population Flows so Persistent?
Date Written: April 2002
Abstract
A neoclassical model of local growth is developed by integrating the static equilibrium underlying compensating differential theory as the long run steady state of a Ramsey-Cass-Koopmans growth model. Numerical results show that even very small frictions to both labor and capital mobility along with small changes in either underlying local productivity or local quality of life together suffice to cause highly persistent population flows. Wages and house prices, in contrast, approach their steady-state levels relatively quickly. Summary empirics suggest that circa 1930, the United States experienced a large shock which redistributed productivity across its localities; that circa 1960, quality of life became more important in driving U.S. population flows; and that circa 1970, the United States experienced a shock which disproportionately affected the installed capital base of some localities relative to others but which left underlying relative productivity and quality of life unchanged.
JEL Classification: F43, J61, O41, R11
Suggested Citation: Suggested Citation
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