The Gift of Moving: Intergenerational Consequences of a Mobility Shock

Emi Nakamura, Jósef Sigurdsson and Jon Steinsson

No 22392, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We exploit a volcanic “experiment" to study the costs and benefits of geographic mobility. We show that moving costs (broadly defined) are very large and labor therefore does not flow to locations where it earns the highest returns. In our experiment, a third of the houses in a town were covered by lava. People living in these houses were much more likely to move away permanently. For those younger than 25 years old who were induced to move, the “lava shock” dramatically raised lifetime earnings and education. Yet, the benefits of moving were very unequally distributed within the family: Those older than 25 (the parents) were made slightly worse off by the shock. The large gains from moving for the young are surprising in light of the fact that the town affected by our volcanic experiment was (and is) a relatively high income town. We interpret our findings as evidence of the importance of comparative advantage: the gains to moving may be very large for those badly matched to the location they happened to be born in, even if differences in average income are small.

JEL-codes: E24 J61 O15 R23 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-geo, nep-lab, nep-mac and nep-mig
Note: DEV EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Published as Emi Nakamura & Jósef Sigurdsson & Jón Steinsson, 2022. "The Gift of Moving: Intergenerational Consequences of a Mobility Shock," The Review of Economic Studies, vol 89(3), pages 1557-1592.

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