Migration and Regional Adjustment to Asymmetric Shocks in Transition Economies

Abstract

Does migration facilitate regional adjustment to idiosyncratic shocks? The evidence from post-communist economies indicates that the efficacy of migration in reducing interregional unemployment and wage differentials is low. High wages appear to encourage and high unemployment tends to discourage overall migration, inbound and outbound, rather than induce a net flow from depressed regions to those with better economic conditions. Even when the impact of unemployment and wages on net migration is statistically significant, it is economically very small. Finally, migration flows declined during the transition, despite rising interregional disparities.

Keywords: Migration, regional adjustment, regional shocks, optimum currency areas

JEL Classification: F22, J61, P23