Determinants of interstate migration in the United States: A search theory approach

Tubagus Feridhanusetyawan

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The study develops and fits two economic models of migration decisions: a commonly used point-in-time discrete choice model and a new model based on the search theory. The search model for migration views migration as a series of sequential decisions made over time under uncertainty. It captures repeated migrations and better fits the life-cycle aspects of migration decisions. The model predicts the relationship between the duration of stay, the hazard rate, and the determinants of migration. The study also develops a new approach for measuring an individual's wage performance as one determinant of migration;The models are fitted empirically to the micro-panel data from the Panel Study of Income Dynamics (PSID). The study follows the interstate migration behavior of 915 male heads of households, who were age 19 to 45 in 1968, from 1968 to 1987. First, wage equations are fitted to create an empirical measure of each individual's wage performance. Then, based on the point-in-time model, the study fits the probability of migration using a standard probit model. Finally, from the search model of migration, the hazard rate for migration by using both a constant and a time-dependent hazard model is estimated;The results show that better local wage performance, being married, having school-age children, being white, being a union member, and being self-employed or a farmer reduce the tendency to migrate. On the other hand, having more education, being young, and being unemployed increase the chances that an individual will migrate. With the increase in the duration of stay, the hazard rate for migration increases in the first four to six years and then decreases over time.

Date: 1994-01-01
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