Should I Stay or Should I Go? The Response of Labor Migration to Economic Shocks

Andrea Foschi, Christopher House, Christian Proebsting and Linda Tesar

No 33755, NBER Working Papers from National Bureau of Economic Research, Inc

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 accounted for mainly through a reduction in unemployment. Over time however, net labor in-migration becomes the dominant factor contributing to increased regional employment. After 5 years, roughly 60 percent of the increase in employment is explained by the change in population. Responses of labor migration are strongest for individuals aged 20-35. Based on historical data back to the 1950s, we find no evidence of a decline in the elasticity of migration to changes in employment.

JEL-codes: E24 E32 F66 J61 R23 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-his, nep-lab and nep-mig
Note: DAE EFG ITI LS ME
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