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Wages, Wellbeing and Location: Slaving Away in Sydney or Cruising on the Gold Coast

Arthur Grimes (), Judd Ormsby () and Kate Preston ()
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Judd Ormsby: Motu Economic and Public Policy Research

No 17_07, Working Papers from Motu Economic and Public Policy Research

Abstract: We analyse the relationships between subjective wellbeing (SWB), wages and internal migration. Our study addresses whether people make (revealed preference) location decisions based on SWB and/or wage prospects. We present both a theoretical intertemporal location choice model and empirical analyses using the Australian longitudinal HILDA dataset. Our theory predicts considerable heterogeneity in location choices for individuals at different life stages depending on their individual characteristics, including their rate of time preference. We find a significant and sustained uplift in SWB for migrants, which holds across a range of sub-samples. By contrast, wage responses are muted albeit with heterogeneity across groups. Our theory and results show that migration decisions are considered within a life-cycle context. The estimated pronounced upturn in SWB for migrants substantiates the usefulness of SWB both as a concept for policy-makers to target and for researchers to incorporate in their studies.

Keywords: Regional migration; wages; subjective wellbeing; non-pecuniary amenities. (search for similar items in EconPapers)
JEL-codes: D91 H75 I31 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-hap, nep-mig and nep-ure
Date: 2017-04
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