Two-Way Migration in a Model with Identical Optimizing Agents

The simplest migration models based on maximizing behavior assume movement toward more desirable locations, and therefore ignore the large portion of moves in the "wrong" direction. Based on a model with identical, utility-maximizing agents, the analysis below shows that changes in relative location attractiveness can cause many migrants to move against the dominant stream. Even when the population distribution is stable and variation in wages and prices across locations reflect compensating differentials, so locations are equally attractive, individuals choose to move between locations, spending parts of their lives in different locations. These results stem from the role of consumption opportunities in migration decisions, highlighting processes that have been largely ignored.