Document Type
Working Paper
Date of This Version
12-1-2012
Keywords
Migration, unemployment, expectations
Abstract
This paper examines the impact of unemployment on migration. In a theoretical model, we show that unemployment, per se, does not affect migration. Rather, migration only occurs when unemployment shocks force residents to update their expectations of the area's unemployment rate. Once these expectations change, migration reallocates labor to bring the economy back to equilibrium. To test this theory, we devise an empirical strategy using state level data in the U.S. from 2000 to 2010, we find strong empirical evidence that unemployment shocks outside of expectations have a far greater impact on migration than unemployment shocks that are within expectations.
Working Paper Number
1205
Recommended Citation
Baumann, Robert; Svec, Justin; and Sanzari, Francis, "The Role of Expectations: An Application to Internal Migration" (2012). Economics Department Working Papers. Paper 6.
https://crossworks.holycross.edu/econ_working_papers/6