Self-Selection and the Returns to Geographic Mobility: What Can Be Learned from the German Reunification 'Experiment'

IZA Discussion Paper No. 2524

DIW Discussion Paper No. 580

31 Pages Posted: 15 May 2006

See all articles by Anzelika Zaiceva

Anzelika Zaiceva

University of Modena and Reggio Emilia; IZA Institute of Labor Economics

Date Written: December 2006

Abstract

This paper investigates the causal effect of geographic labour mobility on income. The returns to German East-West migration and commuting are estimated exploiting the structure of centrally planned economies and a natural experiment of German reunification for identification. I find that migration premium is insignificantly different from zero, the returns for commuters equal to four percent of the mean of the total income, and the local average treatment effects for compliers are insignificant. In addition, estimation results suggest no positive selection on unobservables for migrants, and some evidence of positive self-selection for commuters. Based on these results, moving West does not appear to be a highly rewarded option in Germany.

Keywords: returns to geographic mobility, causality, treatment effects

JEL Classification: F22, J61, J62, R23

Suggested Citation

Zaiceva, Anzelika, Self-Selection and the Returns to Geographic Mobility: What Can Be Learned from the German Reunification 'Experiment' (December 2006). IZA Discussion Paper No. 2524, DIW Discussion Paper No. 580, Available at SSRN: https://ssrn.com/abstract=901146

Anzelika Zaiceva (Contact Author)

University of Modena and Reggio Emilia ( email )

Viale A. Allegri 9
Modena, Modena 42121
Italy

IZA Institute of Labor Economics ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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