The Effect of Expected Income on Individual Migration Decisions

44 Pages Posted: 20 Mar 2003 Last revised: 11 Sep 2022

See all articles by John Kennan

John Kennan

University of Wisconsin; National Bureau of Economic Research (NBER)

James R. Walker

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 2003

Abstract

The paper develops a tractable econometric model of optimal migration, focusing on expected income as the main economic influence on migration. The model improves on previous work in two respects: it covers optimal sequences of location decisions (rather than a single once-for-all choice), and it allows for many alternative location choices. The model is estimated using panel data from the NLSY on white males with a high school education. Our main conclusion is that interstate migration decisions are influenced to a substantial extent by income prospects. The results suggest that the link between income and migration decisions is driven both by geographic differences in mean wages and by a tendency to move in search of a better locational match when the income realization in the current location is unfavorable.

Suggested Citation

Kennan, John and Walker, James Russell, The Effect of Expected Income on Individual Migration Decisions (March 2003). NBER Working Paper No. w9585, Available at SSRN: https://ssrn.com/abstract=389455

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James Russell Walker

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