Gross Migration, Housing and Urban Population Dynamics

54 Pages Posted: 14 Dec 2013

See all articles by Morris A. Davis

Morris A. Davis

Rutgers Business School

Jonas D. M. Fisher

Federal Reserve Bank of Chicago - Economic Research Department

Marcelo Veracierto

Federal Reserve Bank of Chicago - Research Department

Date Written: December 2, 2013

Abstract

Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practice, local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population adjustments. Housing is also a natural candidate for slowing population adjustments because it is difficult to move, costly to build quickly, and a large durable stock makes a city attractive to potential migrants. We quantify the influence of migration and housing on urban population dynamics using a dynamic general equilibrium model of cities which incorporates a new theory of gross migration motivated by patterns we uncover in a panel of US cities. After assigning values to the model's parameters with an exactly identified procedure, we demonstrate that its implied dynamic responses to productivity shocks of population, gross migration, employment, wages, home construction and house prices strongly resemble those we estimate with our panel data. The empirically validated model implies that costs of attracting workers to cities drive slow population adjustments. Housing plays a very limited role.

Keywords: migration, housing, urban population dynamics

JEL Classification: E25, R23, R31

Suggested Citation

Davis, Morris A. and Fisher, Jonas D. M. and Veracierto, Marcelo, Gross Migration, Housing and Urban Population Dynamics (December 2, 2013). FRB of Chicago Working Paper No. 2013-19, Available at SSRN: https://ssrn.com/abstract=2366922 or http://dx.doi.org/10.2139/ssrn.2366922

Morris A. Davis

Rutgers Business School ( email )

Rutgers Business School
One Washington Park #1092
Newark, NJ 07102
United States

Jonas D. M. Fisher (Contact Author)

Federal Reserve Bank of Chicago - Economic Research Department ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Marcelo Veracierto

Federal Reserve Bank of Chicago - Research Department ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States
(312) 322-6595 (Phone)

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