On the Mechanics of Migration Decisions: Skill Complementarities and Endogenous Price Differentials

Posted: 7 Nov 2003

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Abstract

Why are highly skilled workers more responsive than other workers to productivity differentials when taking migration decisions? Why do low-skilled workers abandon rich regions? This paper aims to answer these questions using skill complementarities and endogenous price differentials between rich and poor regions. If the skill premium is increasing in the average level of human capital of a location, the more skilled the workers are, the stronger the economic incentives to migrate to the rich regions become. In contrast, the low-skilled workers have an incentive to migrate to the poor regions to minimize their living costs.

Keywords: internal migration, regional disparities, living costs, housing prices

JEL Classification: R1, O11, O15, O18

Suggested Citation

Giannetti, Mariassunta, On the Mechanics of Migration Decisions: Skill Complementarities and Endogenous Price Differentials. Journal of Development Economics, Vol. 71, No. 2, August 2003. Available at SSRN: https://ssrn.com/abstract=321881

Mariassunta Giannetti (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)

HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

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