Labor Reallocation Over the Business Cycle: New Evidence from Internal Migration

50 Pages Posted: 7 May 2007

See all articles by Raven E. Saks

Raven E. Saks

U.S. Federal Reserve - Division of Research and Statistics

Abigail Wozniak

University of Notre Dame; IZA Institute of Labor Economics

Date Written: August 2007

Abstract

This paper establishes the cyclical properties of a novel measure of worker reallocation: long-distance migration rates within the US. This internal migration offers a bird's eye view of worker reallocation in the economy as long-distance migrants often change jobs or employment status, altering the spatial allocation of labor. Using historical reports of the Current Population Survey (CPS), we examine gross migration patterns during the entire postwar era, a period that spans ten recessions over more than fifty years. We obtain additional evidence on inter-state and inter-metropolitan population flows during the past thirty years from statistics compiled by the Internal Revenue Service. We find that internal migration within the US is strongly procyclical in both sources. Even after accounting for variation in relative local economic conditions, migration is lower during downturns in the national economy. Using individual-level CPS data, we find that migration is procyclical for most major demographic and labor force groups, although it is strongest for younger workers. Our findings suggest that cyclical fluctuations in internal migration are driven by economy-wide changes in the net cost to worker reallocation with a major role for the job finding rate of young workers.

Keywords: internal migration, worker reallocation, business cycles, procyclical migration

JEL Classification: J6, E32

Suggested Citation

Saks, Raven E. and Wozniak, Abigail, Labor Reallocation Over the Business Cycle: New Evidence from Internal Migration (August 2007). IZA Discussion Paper No. 2766; FEDS Working Paper No. 2007-32. Available at SSRN: https://ssrn.com/abstract=984435

Raven E. Saks

U.S. Federal Reserve - Division of Research and Statistics ( email )

20th and C Streets, NW
Washington, DC 20551
United States

Abigail Wozniak (Contact Author)

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN 46556
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
100
Abstract Views
624
rank
265,304
PlumX Metrics