The Effect of Business Cycle Fluctuations on Migration Decisions

76 Pages Posted: 3 Mar 2016

See all articles by Tyler Ransom

Tyler Ransom

University of Oklahoma; Institute for the Study of Labor (IZA)

Date Written: February 25, 2016

Abstract

I examine mechanisms that differentially influence migration behavior in response to labor market shocks between employed and unemployed workers in the US. Over the period of the Great Recession, overall migration rates in the US remained close to their respective long-term trends. However, migration evolved differently by employment status with unemployed workers being more likely to migrate during the recession and employed workers less likely. I estimate a dynamic non-stationary search model of migration, focusing on the role of employment frictions, earnings, and amenities on migration decisions. My results show that employed workers are faced with a large job queuing penalty when moving locations, which results in differing migration incentives for the two groups when faced with adverse labor market shocks. I also find that migration rates were muted because of the national scope of the Great Recession. I show that moving subsidies aimed at mitigating local unemployment are greatly hindered by workers' preferences for amenities.

Keywords: Migration, Recession, Job search, Dynamic discrete choice

JEL Classification: E32, J22, J61, J64, R23

Suggested Citation

Ransom, Tyler, The Effect of Business Cycle Fluctuations on Migration Decisions (February 25, 2016). Available at SSRN: https://ssrn.com/abstract=2741117 or http://dx.doi.org/10.2139/ssrn.2741117

Tyler Ransom (Contact Author)

University of Oklahoma ( email )

729 Elm Avenue
Norman, OK 73019-2103
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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