The Role of Expectations: An Application to Internal Migration

Robert Baumann (), Justin Svec () and Francis Sanzari
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Justin Svec: Department of Economics, College of the Holy Cross

No 1205, Working Papers from College of the Holy Cross, Department of Economics

Abstract: This paper examines the impact of unemployment on migration. In a theoretical model, we show that unemployment, per se, does not affect migration. Rather, migration only occurs when unemployment shocks force residents to update their expectations of the area's unemployment rate. Once these expectations change, migration reallocates labor to bring the economy back to equilibrium. To test this theory, we devise an empirical strategy using state level data in the U.S. from 2000 to 2010, we find strong empirical evidence that unemployment shocks outside of expectations have a far greater impact on migration than unemployment shocks that are within expectations.

Keywords: Migration; unemployment; expectations (search for similar items in EconPapers)
JEL-codes: D8 J61 R23 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-12
New Economics Papers: this item is included in nep-geo, nep-mig and nep-ure
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Citations:

Published in Eastern Economic Journal, Volume 41, Number 3, June 2015, Pages 443-458.

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https://hcapps.holycross.edu/hcs/RePEc/hcx/HC1205- ... nternalMigration.pdf (application/pdf)

Related works:
Journal Article: The Relationship between Net Migration and Unemployment: The Role of Expectations (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hcx:wpaper:1205

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