| Publisher | Federal Reserve Board | ||
|---|---|---|---|
| Format | 276.8KB PDF, requires Acrobat Rdr 5 | Date added | 01 Mar 1999 |
| Topics | Economic Modeling | ||
| Downloads | 2 | ||
Most empirical studies of net migration are based on variations of a simple theoretical model in which net migration to an area depends on the current and expected future value of living there. That is, migration is treated like an investment. Though this has been recognized since Sjaastad (1962), the investment nature of migration has been largely ignored in empirical studies of net migration. To estimate the model, most authors have used state or Census division data to regress net migration on labor market variables such as wages and unemployment. Some authors also include non-market variables such as climate and other amenities (Barro and Sala-i-Martin, 1991). These and other authors acknowledge that as an investment, the migration decision is forward looking. They do not, however, explicitly account for this in their empirical work. This paper shows that because they ignore this aspect of the theory, existing empirical studies of net migration do not properly identify the underlying parameters of the theoretical model.
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