Understanding the Long-Run Decline in Interstate Migration

I consider this question at some length in my forthcoming The Complacent Class, and now there is a new study by Greg Kaplan and Sam Schulhofer-Wohl, consistent with my conclusions:

We analyze the secular decline in gross interstate migration in the United States from 1991 to 2011. We argue that migration fell because of a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving. Micro data on earnings and occupations across space provide evidence for lower geographic specificity. Other explanations do not fit the data. A calibrated model formalizes the geographic specificity and information mechanisms and is consistent with cross-sectional and time-series evidence. Our mechanisms can explain at least half of the decline in migration.

As I put it in the book, if you are a dentist you probably are not going to move from Columbus, Ohio to Denver, Colorado for higher dentist wages.  Rather you will figure out pretty early on which location you prefer and then stay there.

Hat tip goes to the excellent Kevin Lewis.

Comments

How sad to assume that people are mostly moving for wages or jobs, not for love or adventure.

I have lived in 8 different countries, and it was always just for curiosity, to explore a new part of the world, to learn a language.

And when you die and there is no one at your funeral and no family to carry on your genetic and otherwise legacy guess who is going to be shaking their heads with the same condescending sadness.

But he will be dead why is he going to care what happens at his funeral after he dies?

I don't have the solution to your asperbergers here.

I don't think this is a case of Asperger Syndrome. He's just stating the fact that dead people can't care about anything. Funerals are for the living.

I once attend the funeral of a man who had had 5 children, and many grandchildren. He had put down roots in a middling, midwestern rustbelt city, grew his family, and lived modestly despite a pretty good income. For whatever complicated intra-family reasons, by the time of his death most of his children were not talking to him any more and the one or two remaining sons who were still on good terms with him struggled to find enough palbearers to carry his coffin.
You can't live your life with an eye towards your funeral and your legacy. I don't know too many large families that don't also have large problems and are not in some sense disfunctional.

It's not Asperger's, just a fact. George Washington may have monuments named after him, but he wasn't here to see them and remains as dead as ever.

A lot of people care about their reputation after they are dead. I'm genuinely shaking my head condescendingly at your inability to understand that. Clearly though I hit a nerve with a lot of childless people. It's not to late well except for Jan and his problem.

Lots of Sam pointing out to people that, HEY!, he is trying to say something condensing today.

It's a big world out there. I'm glad I'll never have to worry about you crossing my path in it.

And yet you needily respond to like 20 percent of my comments. A lot of people would think you have a little crush.

Somebody's starting to catch on. :-)

But seriously, stop saying asinine stuff and I might lay off you a bit.

So, if you don't move for love, then you are settling for a family you hate, multiple wives and step children??? I can imagine they will either celebrate your passing, fighting over your estate.

Not everyone has the resources to do so. For these people I agree it is sad that they are denied the opportunities you have had.

Also, amongst those who do, they might value other things (community, church, family). I don't think either your experience of adventure or theirs of one of a local life is sad, it's just different because you value different things.

Perhaps a varying amount of foreign immigration through time (i.e. Increasing) had a role to play as well.

Maybe a varying ammount of everything (increasing or decreasing) had a role to play as well.

The point is that foreign migrants may well be increasingly filling jobs that relocating natives would have taken in the past.

Maybe people have come to think that everywhere else is just as bad.

Some economists would look at that conclusion as a necessary one. Utility, blah, blah. blah.

Having spent most of my life in a state (Florida) with a rapidly growing population as the result of in-migration, it's difficult to appreciate what these people are talking about. I suppose it's the end of the mass migration west that provides the impression. Colorado is another state with a rapidly growing population as the result of in-migration; from west (California) to east (Colorado)! Then there's the phenomenon of residing in one place and working in another, made possible by a combination of advancements in communications technology and acceptance (of being in two places at once). As for physicians, they can have a financially rewarding career while practicing in a less than affluent place since the residents don't actually pay for the physician's services. Indeed, being affluent in a less than affluent place is the foundation of a certain school of economics.

I'm less curious about the dentist than the marginally skilled/employed in regions of marginal, or negative growth.

I think there are some obvious things we could do to aid migration, and to ease nonmigration: ease city zoning, and build more rural broadband.

More rural broadband, or more broadband in general has probably caused the lessening of migration. Work from home? Outsource jobs to distant shops because now we can.
I travel about 50% of the time, but actually need to less than 10%. The extra 40 is for people who have yet to realize I don't need to be there to work.

Also, why would we want to aid migration? Migration is a cost, not a cure for anything. Travel (perm move or just temporary) for curiosity or fun is good, but for work - disruptive to family life.

Freeing zoning is a reduction in government which should improve both choice and efficiency. Subsidized rural internet is an increase in government spending, but if net neutral, it should be an investment for long term economic efficiency, and choice, as well.

A dentist of my acquaintance explained why he hadn't relocated to Florida, something he had an interest in doing: he did not think he could pass the licensing examinations. He said there's gobs of material on those examinations he'd never had occasion to use in 19 years as a working dentist and he'd just forgotten it all.

I did know a dentist who relocated from New York to Ohio in 1978, but he'd been clinical faculty at the University of Rochester and had been offered a plum position at Ohio State (and continued to maintain a practice in addition to his teaching); his partner in Rochester was a big kahuna in orthodontics and managed to maintain a two location practice in addition to his teaching, research, and professional assn. work; real pair of dynamos.

he didn't think he could study for the exams? perhaps he just wasn't really that motivated.

Motivated? He can't work until he passes his exams. So it is an expensive and time consuming process.

In return for what?

More marshmallows?

Seems like he didn't really have much desire to move to Florida if the requirement would have simply been to study up on some things he theoretically already spent years learning.

One of the problems with being a successful orthodontist in Rochester is that you're so much richer than almost everyone else. The community can't cater to the types of expensive hobbies and lifestyle as much as larger and wealthier locales--even places like Columbus--can. Maybe some of those guys like to be big fish small pond types, but I'd rather hang out in NYC with the Goldman dudes who can play at my speed.

That's true I bet the Goldman guys tip way more for their pizza deliveries.

Condescending smile.

As if I'd order a pizza when one of the house boys will simply make one whenever I demand it. And just how I like it...

There are plenty of opportunities to blow money in most parts of the U.S. Buy a boat, become an amateur pilot, take weekend ski vacations in the winter and go golfing in the summer, have a swimming pool installed, buy up vintage cars just for the hell of it, etc.

"As I put it in the book, if you are a dentist you probably are not going to move from Columbus, Ohio to Denver, Colorado for higher dentist wages. Rather you will figure out pretty early on which location you prefer and then stay there." That's only partially stated: it doesn't explain the trend. Do you otherwise agree with the authors?

Tyler demonstrates his disdain for capitalism, or his lack of understanding what capitalism is.

It takes perhaps a decade to establish a practice in a given location. That is capitalism at work.

A new dentist will either work for several other dentists part time with one of them seeking to expand his practice, or seeking to tapper off and turn it over, or work part time to earn money while finding some location with low rent that can be expanded to work part-time while finding regular patients, perhaps with a spouse acting as office manager and assistant. In either case, it takes a decade, but now you have hundreds of patients, their records, a lot of equipment, and a staff of people who got you though the building phase, which represent both assets and liabilities. Plus you need to build business relationship with suppliers of standard and custom supplies (crowns, etc) and specialists, the oral surgeons, orthodontists.

But perhaps Tyler sees dentists as merely workers who have no capital investment because they work for big corporate chains owned capitalist shareholders. That means dentists are paid based on productivity, the faster customers are moved in and out of the chair and the bigger the bill per minute in the chair.

"you probably are not going to move from Columbus, Ohio to Denver, Colorado for higher dentist wages." Oh but you are, because they'd be literally higher.

Ok, but I thought the decline in migration was a puzzle mainly because we were wondering why workers weren't moving from declining areas to booming areas like North Dakota, i.e., we *were* observing economic differentials between regions, at least in terms of numbers of jobs if not in terms of wages. So, is declining migration an exogenous shock that makes it more difficult for workers to move to where the jobs are or is declining migration an endogenous result of workers not really needing to move to find better jobs? I guess this is a case of never reasoning from a migration change? I suppose one explanantion is that some regions do have more job openings than others but wages are too sticky to create wage differentials large enough to entice workers to move?

Re North Dakota:

BC,

And don't forget about Tyler's earlier posts that people were going to flock to Texas as well because of the lower taxes.

But, I guess what the conclusion of the post is that people do not move because of taxes.

People move for the jobs. Companies move for the taxes.

So, government is the source of job growth, based on virtual cash paid to move jobs from one State to another State?

After all, lots of businesses pay no income taxes, so the only tax bills are for property, and conservative government officials pioneered directing all taxes paid by a new business into building the property that will be built by the taxes. Ie, Perry built industrial parks with government debt, and then paid off the debt with taxes on just that property over the GAAP depreciation period for the property. Meanwhile, all the public services are paid for by property taxes on the existing businesses who must now pay for police and fire for these new businesses, pay for educating the kids of employees of those businesses which don't pay taxes for the general welfare, just for their own profitable welfare.

I admire conservatives for their ability to hold to conflicting ideologies: government never creates jobs but cuts taxes to pay businesses to move to town with all the jobs, into government built developments.

TMC, I guess you do not see the fallacy of your statement, unless you believe that the companies that move do not have employees.

There is no fallacy in recognizing what people consider in moving. First order motivation is not taxes even if they are going to work for a company motivated by taxes. Your conflating the two does not equal fallacy.

The continued growth of the Bay Area tech industry shows that employers often move where talented employees want to live.

Nearly all companies headquartered in the SF Bay Area started here (or moved here very early after starting up in their founders' garages). It is quite rare for a company that has started up and matured elsewhere to move here, although several have big tech-related offices here (such as Microsoft).

"Nearly all companies headquartered in the SF Bay Area started here"

This is begging the question since many entrepreneurs who are not California natives moved there to start those businesses. Mark Zuckerberg started Facebook when he was a student at Harvard and doesn't appear to have had any family ties to the Bay Area when he decided to locate his company there. Dropbox, Lyft and Uber are both less than 10 years old and are headquartered within the city limits of San Francisco. Netflix and Salesforce are a bit older but have an important presence in Silicon Valley while the makers of the Tinder dating app appear to have launched a Silicon Valley office.

The bottom line is that everyone knows how high the cost of living and supposedly unfriendly the tax system is to businesses in the Bay Area but this appears to be greatly outweighed by the advantages of being in close proximity to the venture capitalists and skilled employees who are essential to creating world-class tech companies.

If taxes we that important, the US economic engines wouldn't be New York and San Francisco.

It's true that what is important that what is important is to have companies, but the important part of having companies is not a sliver of profits, but making it easy to hire, to access customers, and easy access to more funding. Making sure that people aren't afraid of ending up in the gutter if the company goes belly up is important too.

Provide a high base standard of living, promote your local universities, do some strategic investments to bring in venture capital and deregulate the heck out of everything else.

One of the ironies of California's employee-related taxes is they hurt low-wage employment far more than they hurt high-wage employment, as most of them are fixed-cost per employee, and some of them are essentially "regressive" in that they actually cost more for lower-wage employees than higher-wage ones, such as workman's comp insurance.

Bob, what does 'all else equal' mean? Your tax point is wrong. Being poor in NYC or SF is a literal hell compared to being poor in a low cost of living area. Your safety net point is wrong. SF academia isn't producing its workers. Your university point is wrong.

I'm referring to employer taxes and misc overhead, not taxes on individuals.

If taxes were one of the most important things in determining business location, we ought to see the Miami metro area grow into a rival of NYC, LA or the SF Bay Area. Between some of the best weather in the continental U.S. (ok, except for hurricanes), no personal income tax, and relatively low corporate income taxes, what's not to like? Yet there seems to be surprisingly little interest among employers in certain sectors in locating there.

The weather is the main driver for me. I was shocked to learn on a visit to the East Coast that if it's above 90 during a hot day in summer, it'll still be around 90 in the middle of the night. I could never live there.

I've lived most of my life in Silicon Valley, and there usually were uncomfortably hot summers and uncomfortably cold winters, so I used to think it was about as close as I could get to a good balance (other than moving to Hawaii). But it's now been 30 or 40 years since the last really hot summer, so I'm thinking I'd be more comfortable further south. Nowadays it's the winters that bother me more.

I'm from the Midwest, live on the East Coast, visit family in San Jose frequently, and have no idea what you're talking about.

1) If it's 95 on a summer day here, it is not 90 degrees at 2 am. The summers are crappy, don't get me wrong, but 90 in the middle of the night is not a thing. Even a low of 80 or above is pretty rare.

2) Uncomfortably hot summers and uncomfortably cold winters? In Silicon Valley? Ha! If I had to guess, I'd venture Silicon Valley summers have probably gotten warmer the last couple decades, just like most places. But even if summers have gotten cooler there, I'd think it a far cry from uncomfortably hot, at least compared to most places. My in-laws consider people who move inland from the Bay Area to be "insane" because of the weather they expose themselves to. You guys are spoiled.

Here in Silicon Valley, at night we get the cooler air off the ocean. When I went out to Bell Labs in New Jersey, there were no cool breezes. It was hot as hell day and night.

Inland from the Bay Area is for races adapted to hot weather. As soon as you go over the mountains to Livermore in summer, it's like opening the door on an oven. The blast of heat tells any sane man to turn around and go back to habitable territory.

The population of California increased 29% between 1991 and 2015. Evidently those people were either born there or arrived from Mexico and Asia.

That's what, 24 years? So we're talking about 1% per year give or take? There's half a million babies born in California every year nowadays which is a little over 1% (California's population is 38 million) so yeah, there were born here. And some left.

"they were born here" not "there were born here"

And I'm sure some did come from Asia and Mexico.

While many others moved to Texas because real estate is so expensive here.

But did anyone die?

It's California, so yeah, all of cancer.

The best state with the highest population where the most people want to live does have a way of metastasizing!

People would rather live on Hawaii. Another state with massive blue-policy induced wealth. (Not)

Just a little joke how every product says it's known to cause cancer in California.

"But did anyone die?"

I said "and some left." I just didn't say how or where they went.

Not mentioned is the two-body problem -- if a guys get a job offer in Denver, it's much easier to go if his wife doesn't work than if she has her own career. And parents who both work have been getting more common.

And single-parent households, also more common now... are perhaps also more reliant on a local network, grandmothers babysitting etc.

All factors, especially the local network. My sister moved back from Chicago after having kids. Two income family, but made it work for the family support.

+1 on the first point. And it is further exacerbated by increased sorting by educational attainment. There are now more professional couples made up of a man and a woman (shout out to my "one man one woman" peeps!) who are roughly equivalent financial contributors and both serious about their careers. Back in the day, even if mom worked, dad's job would almost always take precedence when new opportunities were available.

Make sure the women don't have kids. They'll end up liking them and staying home more, contributing to our gender pay gap and betraying both their sex and the DNC.

Part of the picture is that people don't just TO somewhere, they're also moving AWAY from somewhere, and until the 90's, one of the somewheres you could move away from was your own past. Bad credit, criminal backgrounds, other issues could be wholly or partially erased by moving to a different state. You could adopt a new identity.

Today your identity and history follows you everywhere, and you can't really start over again no matter what.

If you have good credit and 'good' history you likely have a set of personality traits that promote settledness, and if you don't have them you can't ever get away from them.

The background check phenomenon produces this. Any number of things can cause a failure of a background check and once it has been failed the subject is well aware that they won't pass one in the future. Since no one ever escapes a bad background check, the list of unemployables that can't rent an apartment will continue to grow. But they'll still need to eat, wear clothing and get out of the rain at night. Gray market businesses that employ these people and satisfy their needs will become common. A caste system will develop and the background check failures will be members of the lowest caste. They, and their children, will be forever doomed to being this era's "untouchables".

Until they buy machine guns.

While criminal records stay with you for life, credit history and driving records do clear after a number of years.

1. Two income families. If both have skills that are well paid, the difficulty of moving increases, and there is a likelihood that one or the other will be worse off.

2. How many such moves can a median income afford over their working lives? The costs are high in exchange for what?

3. No one moves for a short term job unless they are young and/or the remuneration is exceptional. It is one thing to move to Detroit in it's heyday with the high wages and long term job security, another to uproot your family for a bit better money and to put yourself on a list for outsourcing.

4. There is a real possibility that you will end up poorer and divorced. Risk is high, rewards are just not there.

An anecdote. The nurse who does a regular checkup on me is well paid with specific technical skills. Her husband is a mechanical engineer who worked at the local smelter. He got laid off, and the options were all complicated. Find somewhere with a demand for both skills, and match the housing costs so their housing situation would be an improvement or equal. They have decided to stay put, her income is very good, and he travels for short term contracts. He eventually found something locally, not as good as what he had, but all things considered good enough.

A very large number of people working in the Alberta oil patch were commuting from elsewhere. Almost every regional airport in the country had direct flights to Fort McMurray, Calgary or Edmonton. I suspect a similar thing is happening in North Dakota.

Re: How many such moves can a median income afford over their working lives?

I moved non-locally in 1999, 2003, 2006 and 2008. The last one was an employee relocation paid 100% by my employer. The first three were do-it-yourself moves with logistical help from friends and family (and the first two with some fairly limited financial help from employers at new jobs I had gotten). In all three of those cases I had new jobs lined up already when I moved. Something not mentioned here, but it is remarkably easy to job hunt long distance nowadays.

Not directly related, but why do economists use "secular" when using "temporal" would make their work more easily understood by those in other sciences? Was there a time when one term won out in economics and the other in the physical sciences? Would using "temporal" in an econ paper be as weird as if I used "secular" in a scientific paper? Even though both words still have 2 meanings ("as a function of time" and "earthly contra heavenly"), most people understand the latter as the meaning of "secular." Why perpetuate a potential source of confusion?

Perhaps a real economist can correct me, but I thought "secular" meant a slow change, for instance driven by technological or social changes, distinguished from faster changes caused by recessions or other temporary effects. Roughly time scales >10 years?

I assume "secular" change is distinguished from cyclical change; both are temporal changes.

secular=not arising from animal spirits, a la Keynes.

I guess The Grapes of Wrath would read differently if the Joad family had internet.

I have lived in Michigan, Iowa, New York, two places in Indiana before age 18 as my dad was paid to move from church to church, then I moved to college, paid to move looking for work once which didn't pan out, then got paid by my new employer after I moved back to Indiana to move to Kentucky, three places in Illinois, then Massachusetts, then New Hampshire, all those moves between 1947 and 1980.

After 1980, tax reform pushed by Milton Friedman - lower rates and fewer deductions - made business moves far more costly to either the employer or the worker.

When tax rates were 50% and up, and lots of things can be business deductions like paying all the relocation costs for employees including all the real estate fees and temporary housing and financing costs and eliminating all the risk of buying a new house without first selling your old house, businesses could easily get employees to move where they were needed quickly.

IBM was hardly unique, but everyone knew IBM stood for I've Been Moved. My cousin who worked for AT&T and then IBM moved twice for every move I did working for DEC where I was the go to guy for customer on-site contracts because I was single. And IBM kept moving lots of employees for employee development and to startup new operations longer than most other corporations.

And government promoted moving by the large military and the draft. But in the 80s, jobs were exported to local communities by being taken away from draftees and volunteer and career military. Draftees were in for two years, with a year of combat or potential combat duty, Vietnam or Korea and Germany, with the rest of the time after boot camp and specialty training working in one form of logistics or another: cook, laundry, hauling and warehousing stuff, shuffling paper, handling comms. Volunteers signed up to get training for a career in exchange for one or two tours, with a year of training in flying related jobs, or naval jobs, or equipment maintenance, and a year of career building experience. Once out of the military, volunteers got added stipends for education and training which made moving someplace new easy, plus got hiring preferences at both government and most corporations and some small businesses. Career military got retirement pay that supported going someplace to start a life or career or businesses, often based on places discovered while being moved around by the military.

That military structure that moved millions of people around each year was phased out in the 80s and millions of jobs locked down into communities with often no other future. Especially after bases were closed, mostly in the Democratic majority regions.

Thanks for sharing, Mulp.

Re: After 1980, tax reform pushed by Milton Friedman – lower rates and fewer deductions – made business moves far more costly to either the employer or the worker.

Huh? As long you are moving more than 50 miles your moving expenses are still tax deductible. I've taken advantage of that before. And relocation paid by an employer is also tax free (in terms of the actual moving costs) to the employee and, as a form of employee compensation, also not taxable for the employer.

Honestly -- leave it to Tyler to make things unnecessarily complicated. I guess if things were easier to understand, he'd be out of a job, so I forgive him.

As the USA becomes increasingly more statist, much to Tyler's delight, the idea that Americans should actually get off their asses (including to another state) to improve their welfare is increasingly horrifying to them.

Americans are entirely comfortable staying in their hometowns, demanding more welfare benefits, and even voting Dem if necessary.

At least -- so we thought, until the unbelievably historic 2016 US Presidential election. Far too early to tell if it means anything.

Most people want jobs (that pay a living wage), not welfare. The "makers and takers" myth needs to die.

I would also think that as the baseline standard of living improves, there is less of an impetus to move for a higher-paying job. If you have basic life needs met, you may choose community, friends and family over somewhat nicer things. Whereas if you don't have those basic needs covered, you may uproot yourself for the same incremental increase in income in order to be able to cover them.

As the median age grows older we'll also see less moving since it's a lot easier to throw a few things in a UHaul when you are single and 25 than move an entire household, kids and pets and all, when you are 45.

The study focuses on regional differences (or lack thereof) in income for a given occupation, but barely mentions regional differences in costs at all. Housing costs have been cited for decades as the reason people flock from California, Massachusetts and other high-cost regions to nearby lower-cost states. If this is true, wouldn't housing costs also be preventing people from moving to high-cost regions in the first place?

That seems to be the conclusion of this paper by Ganong and Shoag (http://scholar.harvard.edu/files/shoag/files/why_has_regional_income_convergence_in_the_us_declined_01.pdf), which the Kaplan study mentions only in passing. What's the counterargument?

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