Economics at your fingertips  

Migration’s inability to alleviate regional disparities: the grass is still greener on the other side of the fence

Lorenz Fischer

Empirica, 2019, vol. 46, issue 1, No 2, 5-29

Abstract: Abstract This paper attempts to explain the seeming unresponsiveness of labor to react to economic disparities in terms of migration. In theory, the potential of workers to implicitly alleviate regional disparities in, for example, unemployment or wage levels by relocating appears potent, but finds little support empirically. To resolve this perplexity, a dynamic discrete choice model is used, which translates into a two stage estimation strategy for recovering structural parameters. Investigating Austrian bilateral movements on the NUTS 3 level from 2002 to 2014, the results suggest that this unresponsiveness builds on two pillars. First, estimated average migration costs are in the range of six times the average annual wage, which appears sizable enough to prevent taking advantage of economic opportunities for workers. These costs are shown to have decreased over time, though. Second, the relatively high variation in the random utility shifter can be interpreted as relative unimportance of regional disparities in forming migration decisions. Finally, a spatial approach on estimated regional valuations reveals an apparent ‘beauty contest’ of regions, where regions’ own valuations suffer from proximity to highly attractive ones.

Keywords: Regional migration; Dynamic discrete choice; Gravity; Migration costs; Regional disparities (search for similar items in EconPapers)
JEL-codes: R10 R23 C31 C35 D15 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... ration/journal/10663

DOI: 10.1007/s10663-018-9409-7

Access Statistics for this article

Empirica is currently edited by Fritz Breuss and Fritz Breuss

More articles in Empirica from Springer, Austrian Institute for Economic Research, Austrian Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2020-12-16
Handle: RePEc:kap:empiri:v:46:y:2019:i:1:d:10.1007_s10663-018-9409-7