Should I stay or should I go? The response of labor migration to economic shocks

Andrea Foschi (), Christopher L. House (), Christian Proebsting () and Linda L. Tesar ()
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Andrea Foschi: Bank of Italy
Christopher L. House: University of Michigan and NBER
Christian Proebsting: KU Leuven
Linda L. Tesar: University of Michigan and NBER

No 1489, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We examine the responsiveness of labor participation, unemployment and labor migration to exogenous variations in labor demand. Our empirical approach considers four instruments for regional labor demand commonly used in the literature. Empirically, we find that labor migration is a significant margin of adjustment for all our instruments. Following an increase in regional labor demand, the initial increase in employment is mainly accounted for by a reduction in unemployment. Over time, however, net labor in-migration becomes the dominant factor contributing to increased regional employment. After five years, roughly 60 per cent of the increase in employment is explained by the change in population. The responses of labor migration are strongest for individuals aged 20-35. Based on historical data that go back to the 1950s, we find no evidence of a decline in the elasticity of migration to changes in employment.

Keywords: labor mobility; migration; unemployment; regional labor markets (search for similar items in EconPapers)
JEL-codes: E24 E32 F66 J61 R23 (search for similar items in EconPapers)
Date: 2025-06
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