ESTIMATING INTERREGIONAL UTILITY DIFFERENTIALS*

ABSTRACT The major objective of this paper is to estimate regional utility levels based on interregional migration data. We first revealed three stylized facts concerning migration behavior by examining long‐term Japanese data on interregional migration. We then uncovered inconsistency between net migration and utility differential in the presence of distance‐related migration costs. Based on the stylized facts and the inconsistency problem, we formulated an operational model and estimated interregional utility differentials. We showed that the interregional utility differentials converged until the late 1970s. We also showed that the utility estimates are highly correlated with the per capita real income. We also applied the model to interregional migration data in the United States and Canada and confirmed the model's validity.     

Regional labor markets and the household migration decision

"The current work extends the modeling of the household migration decision to take into account location-specific influences and relates these to regional wage differentials. This allows for more complete analysis of real wage gains or losses associated with migration and inferences regarding the nature of equilibrium or disequilibrium wage differentials between regions." Data are from the Michigan Panel Study of Income Dynamics for the period 1976-1978. "The results indicate systematic and often substantial influences of household location on the nominal wage and on both job and residence mobility. Based on these findings, comparisons of wage growth patterns are made for those changing jobs and region of residence status. Although compared to other households the wage growth of these migrants is on average lower before migration and higher after migration, the analysis provides no support for arguments that nominal regional wage differentials reflect systematic ordering of real wage differentials. This finding suggests that real wage gains are closely tied to the interregional migration decision but are not related to regional nominal wage differentials in a simple fashion."     

The assumption of equilibrium in models of migration

In recent articles Evans (1990) and Harrigan and McGregor (1993) (hereafter HM) scrutinized the equilibrium model of migration presented in a 1989 paper by Schachter and Althaus. This model used standard microeconomics to analyze gross interregional migration flows based on the assumption that gross flows are in approximate equilibrium. HM criticized the model as theoretically untenable, while Evans summoned empirical as well as theoretical objections. HM claimed that equilibrium of gross migration flows could be ruled out on theoretical grounds. They argued that the absence of net migration requires that either all regions have equal populations or that unsustainable regional migration propensities must obtain. In fact some moves are inter- and other are intraregional. It does not follow, however, that the number of interregional migrants will be larger for the more populous region. Alternatively, a country could be divided into a large number of small regions that have equal populations. With uniform propensities to move, each of these analytical regions would experience in equilibrium zero net migration. Hence, the condition that net migration equal zero is entirely consistent with unequal distributions of population across regions. The criticisms of Evans were based both on flawed reasoning and on misinterpretation of the results of a number of econometric studies. His reasoning assumed that the existence of demand shifts as found by Goldfarb and Yezer (1987) and Topel (1986) invalidated the equilibrium model. The equilibrium never really obtains exactly, but economic modeling of migration properly begins with a simple equilibrium model of the system. A careful reading of the papers Evans cited in support of his position showed that in fact they affirmed rather than denied the appropriateness of equilibrium modeling. Zero net migration together with nonzero gross migration are not theoretically incompatible with regional heterogeneity of population, wages, or amenities.     

The determinants of labor migration in Egypt

The factors which affect individual decisions with regard to geographic movement in Egypt are examined and the magnitude in which each factor exerts its influence on aggregate geographic labor supply adjustments is estimated. The spatial unit used in the study is the administrative region, of which there are 25. No effort is made to esimate the impact which migration has had on the origin or destination region. The migrant will presumably choose that destination which, given his information, the migrant thinks will be best. The model which is employed attempts to explain gross interregional migration without the explicit introduction of an individual decision function. Rather, migration is related to certain aggregate proxy variables. Among the independent variables employed in the analysis are (origin and destination) income, education, urbanization, and population. The other explanatory variable used is the distance between region i and region j. The migration measure employed refers to cumulative male migration which occurred prior to 1960; the independent variables are defined for a given point in time (1960). The independent variables explain a reasonably large percentage of the variance in migration between regions in Egypt. All variables were significant at the 5% level or better. The findings indicate that distance acts as an important impediment to migration. Migration is away from low wage and toward high wage regions, which may have contributed to a narrowing of regional wage differentials. Migrants are attracted to regions which have large populations and to regions which have a large percentage of urban to total population. A tendency exists for migrants to come from regions with large populations. There is also some tendency for migrants to come from regions which have a relatively large urban population. Migrants do not appear to come from regions with high educational levels.     

How to improve the quality of life in peripheral and lagging regions by policy measures? Examining the effects of two different policies in Germany

Peripheral regions commonly appear to be less attractive to live in and policymakers all over the world are applying various measures to make them more attractive. This paper analyzes the effects of two very different measures: The German municipal fiscal equalization scheme and the German structural funds for economically weak areas (GRW). It focusses on the impact on perceived quality of life, measured through interregional migration between German labor market regions. Using a spatial vector autoregressive panel model, we find evidence that equalization transfers have a significant positive impact on regional net migration and contribute to the aim of regional equity. These effects are especially found for regions with low endogenous fiscal capacities. GRW funding reveals no significant effects on net migration rates in total, but short-term effects in rural regions.     

METROPOLITAN AND NON-METROPOLITAN POPULATION TRENDS IN CANADA, 1966–1982

This paper discusses broad population movements within and between metropolitan and nonmetropolitan regions in Canada during the recent past. It is based on an annual series of aggregate migration at the metropolitan level. Three complementary approaches are used in order to distill information from this vast array of interregional flows. The first is based on net migration. The second, disequilibrium analysis, is based on the difference between the observed population shares of regions and a set of calculated steady-state population shares which would result if the currently observed set of interregional migration rates remained constant. Both approaches indicate short-term effects of migration on the evolving pattern of regional growth and decline. The third approach, based on aggregate interregional flows, allows one to observe some changes in migration behaviour which are not made evident by the first two approaches.     

A Flexible Mathematical Programming Model to Estimate Interregional Input–Output Accounts*

Abstract. This study implements and tests a mathematical programming model to estimate interregional, interindustry transaction flows in a national system of economic regions based on an interregional accounting framework and initial information of interregional shipments. A national input–output (IO) table, regional data on gross output, value‐added, exports, imports, and final demand at sector level are used as inputs to generate an interregional IO account that reconciles regional economic statistics and interregional transaction data. The model is tested using data from a multiregional global IO database and shows remarkable capacity to discover true interregional trade patterns from highly distorted initial estimates.     

MEASURING CONTRIBUTING FACTORS TO INTERREGIONAL AGRICULTURAL LABOR PRODUCTIVITY DIFFERENTIALS: A JOINT PROFIT FORMULATION*

ABSTRACT Using Taylor series approximations of joint profit functions, a methodology is outlined to quantify interregional differentials in the Canadian agriculture sector by region and to quantify the contributing factors to regional labor productivity differences. These contributing factors are output price differentials–both crop and livestock, differentials in “land and buildings” capital deepening, “other” capital deepening, energy prices, other material prices, and efficiency. The joint profit formulation permits the analysis of effects of regional specific output price and output mix differentials.     

Interregional Wage Disparities, Relocation Costs, and Labor Mobility in Canada

This paper evaluates possible reasons why interregional wage differences might persist over long periods of time, such as a century or more. A general equilibrium model of interacting regions is developed which can consider explanations including interregional differences in production costs, changes in relocation (migration) costs, and differences in interregional transfer payments. Implications from the model are tested using panel microdata from the Canadian Labour Market Activity Surveys of 1989 and 1990. Key findings are that younger, better educated, native English-speaking workers, who presumably have better information and lower mobility costs, appear to have the smallest interregional wage differences. Thus, because the extent of spatial wage dispersion varies across workers with different characteristics, changes in the pattern of spatial wage disparities over time may be in part a demographic phenomenon.     

Major Cyclical Components of the 1966–71 Canadian Interregional Population System

The eight most durable cyclical components determined by the 1966–71 structural matrix of the eight-region and ten-age-group Canadian interregional population system are identified. Each of these components is related to a unique region. Their periods distribute within a narrow range around the length of a generation, while their half lives vary substantially, mainly due to a large variation in the shapes of regional fertility schedules. The magnitudes of cyclical waves transmitted among regions tend to be positively related to interregional outmigration rates. The most durable and significant cyclical component has its greatest impact on the age profile of Ontario.     

RECESSIONARY SHOCKS AND REGIONAL EMPLOYMENT: EVIDENCE ON THE RESILIENCE OF U.K. REGIONS*

ABSTRACT We analyze the resilience of U.K. regions to employment shocks. Two basic notions of resilience are distinguished. With engineering resilience, there is an underlying stable growth path to which a regional economy rebounds following a shock. With ecological resilience, shocks can permanently affect the growth path of the regional economy. Our data set consists of quarterly employment series for 12 U.K. regions (NUTS I) for the period 1971–2010. Using a seemingly unrelated regression (SUR) model specification, we test for the relevance of (engineering) resilience of U.K. regional employment to the four recessionary shocks in our sample. It turns out that U.K. regions do indeed differ in their resilience, but that these differences mainly concern the initial resistance to these shocks and not so much the recovery stage. The SUR model does not allow shocks to have permanent effects and it also does not take the possibility of time differentiated shock spillovers between the 12 regions into account. To this end, we also estimate a vector error‐correction model (VECM) specification where employment shocks can have permanent effects and where also interregional employment linkages are included. We find that employment shocks typically have permanent effects when it concerns the own‐region effects. Permanent effects can also be found for the impact on other regions but the interregional effects are typically only significant for nearby regions.     

The effects of internal migration on regional wage and unemployment disparities in Canada

"This paper examines the role of the migration mechanism in the context of a general interregional factor flow adjustment model. Using an estimation technique, which pools cross-section and time series data, the direct effects of migration flows and regional investment on the growth of regional wages and unemployment [in Canada] are examined. The results suggest that migration has a small, but significant impact on regional wages and unemployment rates."     

A LONG RUN ECONOMIC EFFECT ANALYSIS OF ALTERNATIVE TRANSPORTATION FACILITY PLANS—REGIONAL AND NATIONAL

Initially we explained the main part of our model which enabled us to estimate and compare the long run and global economic effects of alternative transportation facility plans. Usually the short run effects of this kind of regional economic impact have been analyzed by input-output models, and the long run effects by econometric models. However, in this model, the input-output model and the econometric model were combined so as to enable us to analyze the global and long run economic effects. The interregional trade pattern coefficients and input coefficients change endogenously in each year in this model. It has previously been assumed that the fixedness of interregional trade pattern coefficients and input coefficients are the weakest points in applying the interregional input-output model for long run studies. In our model, on the contrary, variation of these coefficients has central importance. We then showed the results which were obtained from applying this model to a comparison of the long run economic effects of alternative bridge construction plans over the Japan Inland Sea. The results obtained from this demonstrative calculation are reasonable. Thus, we think, this model has sufficient applicability to the comparison of economic effects of alternative plans for nationwide transportation facility improvement. However, the variations of production cost differentials between regions are given exogenously in this model. To make them endogenous, agglomeration economies should be considered more precisely. In that case, the applicability and the precision of this model could be improved.     

An Analysis of Migration Streams for the Canadian Regional System, 1952–1983 1. Migration Probabilities

This is part one of a two-part series that seeks to specify the factors and processes contributing to aggregate change in the Canadian population distribution over the recent past. In part one, we use a model of migration probabilities to identify socioeconomic factors that explain the observed interregional migration flows. In part two, we use an adjustment process for our regional population system to calculate equilibrium population distributions. The estimated migration probabilities of part one are essential for this calculation, thus linking equilibria with the socioeconomic factors previously identified. Disequilibrium, defined as the difference between observed and equilibrium population distributions, is then used to infer relative growth and decline tendencies in the system. We examine and justify our results in the larger context of contemporary Canadian history.     

An Analysis of Migration Streams for the Canadian Regional System, 1952–1983: 2. Disequilibrium

This is part two of a two-part series that seeks to specify the factors and processes contributing to aggregate change in the Canadian population distribution over the recent past. In part one, we use a model of migration probabilities to identify socioeconomic factors that explain the observed interregional migration flows. In part two, we use an adjustment process for our regional population system to calculate equilibrium population distributions. The estimated migration probabilities of part one are essential for this calculation, thus linking equilibria with the socioeconomic factors previously identified. Disequilibrium, defined as the difference between observed and equilibrium population distributions, is then used to infer relative growth and decline tendencies in the system. We examine and justify our results in the larger context of contemporary Canadian history.     

STEADY-STATE LABOR TURNOVER AS OPTIMAL HOUSEHOLD BEHAVIOR*

ABSTRACT. Models of the firm with costly labor turnover and models of migration with location-specific consumption amenities are two standard explanations of the co-existence of persistent wage differentials with extensive labor mobility. Labor turnover models postulate a worker quit function where the quit rate is inversely related to the regional wage differential in the steady state. We use amenity-consumption models of migration to show conditions under which this postulate is consistent with household utility maximization. Our model extends standard amenity-consumption analysis by making the value of amenities contingent on the “state” of the household. These household states are defined in terms of demographic, education, and health characteristics and are assumed to follow a Markov process.     

区域经济联系测度方法述评

区域研究是地理学的核心之一。区域经济联系测度是区域研究的焦点。在系统总结区域经济联系测度的理论与方法的基础上,本文认为区域经济联系测度一般依循尺度确定-区域划分-区域联系测度的路径;测度区域经济联系的主要指标有可达性、经济影响范围、经济联系强度、经济隶属度等。城市在区域网络中的作用、位置是区域经济联系测度的重点。通过区域经济联系强度的测度,有助于区域和城市发展定位,并指导规划。近年来城市化、信息化、全球化的快速发展对区域经济联系的测度提出了新的挑战,需要综合不同的方法或发展新方法来应对。     

UPPER BOUNDS ON THE SIZES OF INTERREGIONAL FEEDBACKS IN MULTIREGIONAL INPUT-OUTPUT MODELS*

ABSTRACT. Upper bounds are presented for a measure of the overall percentage error caused in a multiregional input-output model when interregional feedback effects are ignored. This error figure is thus a measure of the magnitude of interregional linkages. The upper bounds are expressed as a function of the levels of self-sufficiency in the regions in the model and of the norms of the regional technical coefficients matrices. Experimental results are presented for a variety of examples that are thought to reflect real-world situations, and it is clear that in many cases the upper bound (and hence the error) is extremely small. The implication is that single-region input-output models may be adequate for a variety of questions.     

An equilibrium model of gross migration

ABSTRACT The paper presents and tests a new model of migration which differs significantly from the conventional disequilibrium approach. We show that variations in rates of gross migration across regions are equilibrium responses to variations in levels of amenities, governmental policies, etc. The model is tested using data on the gross migration of whites, 1975-80, together with amenities such as climate and with economic variables such as government services, taxes and unionization. Empirical results suggest that the equilibrium model is more consistent with actual migration patterns than is the conventional disequilibrium approach. We estimate compensating differentials and migration elasticities for these variables.     

THE EFFECT OF PROPERTY TAX RATE DIFFERENTIALS ON SINGLE-FAMILY HOUSING STARTS IN WISCONSIN, 1978–1989*

ABSTRACT. A pooled cross-section time-series approach is used to test the hypothesis that differences in property tax rates between and across regions exert an excise-tax impact on housing starts. Synthesizing the research regarding property tax incidence on housing markets and residential location with that of regional housing studies, an empirical model that allows for inter- and intraregional influences on housing starts is developed. Using county data from Wisconsin over a twelve-year span, I find that property tax rate differentials have a negative effect on the construction of single-family houses.