Interprovincial Migration and Local Public Goods

Kathleen Day ()

Canadian Journal of Economics, 1992, vol. 25, issue 1, 123-44

Abstract: The objective of this paper is to test whether fiscally induced migration occurs in Canada; that is, whether interprovincial migration flows are influenced by government tax and expenditure policies. In order to do so, a multinominal logit model of migration is developed in which individuals choose to live in the province where their utility would be highest. The model is estimated using aggregate data for the period 1962-81 and the generalized least squares estimation technique suggested by Parks (1980). The results indicate that migration is influenced by provincial government spending, though the magnitudes and direction of the effect differs with the type of government spending. Provincial income tax rates, provincial transfer payments to persons, and average Unemployment Insurance intergovernmental transfer payments and provincial natural resource revenues also have the potential to influence migration flows in Canada.

Date: 1992
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