The Contrasting Importance of Quality of Life and Quality of Business for Domestic and International Migrants

Abstract

We examine whether bilateral regional migration flows are driven by the city’s quality of life (QL) or quality of business (QB). The QL and QB measures are constructed using (quality-adjusted) rents and wages in each city. QL and QB reflect the willingness to pay of households and firms, respectively, for local amenities. The measures are constructed for 31 urban areas in New Zealand using five-yearly census data covering 1986 to 2013. We adopt a gravity model of regional migration – augmented by destination and origin QL and QB – to model bilateral flows of working-age migrants (post tertiary education and pre-retirement age). We also model flows between urban and rural areas and flows for the urban areas to and from overseas locations. We find different attractors for international versus domestic migrants according to the type of city amenity. International migrants are more attracted to cities with productive amenities whereas domestic migrants are more attracted to places with consumption amenities. Thus, in deciding on the type of city amenity to enhance, city officials implicitly choose the type of migrant that they attract as well as the type of city that may result.

Keywords: migration, amenities, quality of life, quality of business, gravity model

JEL Classification: J61, R23, R58