A generalized options approach to aggregate migration with an application to US federal states

Christian Bayer and Falko Juessen

No 656, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a tractable dynamic microeconomic model of migration decisions that is aggregated to describe the behavior of interregional migration. Our structural approach allows to deal with dynamic self-selection problems that arises from the endogeneity of location choice and the persistency of migration incentives. Keeping track of the distribution dynamics of migration incentives has important consequences, because these dynamics influences the estimation of structural parameters, such as migration costs. For US interstate migration, we obtain a cost estimate of approximately two average annual household incomes. This is at most half of the migration cost estimates reported in previous studies. We attribute this difference to the treatment of the self selection problem

Keywords: Self selection; migration; indirect inference; dynamic optimization (search for similar items in EconPapers)
JEL-codes: C20 C61 J61 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (1)

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