NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effect of Expected Income on Individual Migration Decisions

John Kennan, James R. Walker

NBER Working Paper No. 9585
Issued in March 2003
NBER Program(s):   EFG   LS

The paper develops a tractable econometric model of optimal migration, focusing on expected income as the main economic influence on migration. The model improves on previous work in two respects: it covers optimal sequences of location decisions (rather than a single once-for-all choice), and it allows for many alternative location choices. The model is estimated using panel data from the NLSY on white males with a high school education. Our main conclusion is that interstate migration decisions are influenced to a substantial extent by income prospects. The results suggest that the link between income and migration decisions is driven both by geographic differences in mean wages and by a tendency to move in search of a better locational match when the income realization in the current location is unfavorable.

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This paper was revised on February 12, 2008

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Published: “The Effect of Expected Income on Individual Migration Decisions” (with James R. Walker), Econometrica 79 (1), January 2011, 211-251

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