The effects on earnings of interregional and interindustry migration

"The purpose of this study is to examine a model of the decision to migrate between regions and/or industries and its effect on earnings. The study is based on a large set of individual microdata taken from the [U.S.] Social Security Administration's One Percent Continuous Work History Sample." The data are for 1971 and 1973. "Results of estimation provide strong support for the hypothesis of self-selection among region and industry migrants. Additional empirical evidence supports the notion of comparative advantage in migrant earnings, implying that earnings distributions of individuals who made a particular combination of migration decisions may differ from those of the population as a whole."     

MIGRATION AND SELF‐SELECTION: MEASURED EARNINGS AND LATENT CHARACTERISTICS*

ABSTRACT Research in regional and labor economics has established that economic incentives play a significant role in the process of internal migration. The most common approach is to view migration as a form of human capital investment undertaken by individuals who expect to benefit from the standpoint of increased earnings. One of the central concepts in these models is self‐selection. Individuals who self‐select the option of migration tend to differ from the nonmigrant population in ways that are not measured in most data sets. The contribution of this paper is in its distinction between two aspects of migrant selection. On one hand, some workers possess unmeasured traits that might simultaneously affect their wages and their propensity to engage in risky human capital investment such as migration. On the other hand, measured earnings might exert a direct effect on migration. Based on samples of employed Swedish males and females at two points in time, this study seeks first to examine whether migration between the two periods occurs in the presence of correlation between unmeasured factors present in both earnings during the first period and the subsequent decision to migrate. Second, it looks for an explicit role of earnings per se in the migration decision. Results of the study provide support for selection based on unmeasured traits for both genders. For females, there is also evidence of selection based on measured earnings.