Economic Freedom and Migration: A Metro Area-Level Analysis

Abstract

We examine the determinants of intra-U.S. population migration at the metropolitan area level (MSA), with an emphasis on the presence of policies that are consistent with economic freedom. We are the first to produce a multi-variate regression analysis of migration and economic freedom at the local level. Combining a 1993-2014 unbalanced panel of MSA-to-MSA migration data from the Internal Revenue Service with a new economic freedom index for U.S. metropolitan areas, we find that a 10 percent increase in economic freedom of a destination MSA, relative to the economic freedom of an origin MSA, was associated with a 27.4 percent increase in net migration from the origin MSA to the destination MSA. If we use mean net migration flows as a benchmark, we would expect a 10 percent increase in relative economic freedom to increase net migration to the destination MSA by 22 workers per year from each other MSA.

Keywords: migration, metropolitan areas, economic freedom

JEL Classification: R23, H73