Functional forms and the relevance of contiguous migration in the study of migration and employment growth

Previous studies on interstate migration have dealt with total migration without decomposing it into contiguous and noncontiguous migration flows. Since migration over borders of contiguous states may merely reflect changes in residence without changes in economic activities, the use of total migration data might reduce the reliability of empirical results. In this study, a simultaneous-equation model containing two equations, one for migration and the other for employment growth, has been specified in a general form and estimated by the 2SLS method for total, contiguous and noncontiguous migration flows. Results obtained from the use of 1970 Census data show that noncontiguous migration behaves significantly different from contiguous migration, and that noncontiguous migration, rather than total migration, should be used for the study of factors affecting interstate migration. Results also indicate that the log-linear functional form commonly used in empirical studies cannot be accepted statistically.     

The migration response to the economic turnaround in New England

"This paper is an investigation of the dynamics of interstate migration flows to and from New England since 1975. The main goal of the research is to study the timing and volume of the lagged migration adjustment to the regional economic turnaround and the temporal stability of patterns of regional inflows and outflows. The paper is an examination of the responsiveness of interstate migration to changing regional economic conditions based on annual interstate migration data and a set of cross-sectional destination-specific Poisson regression models." The data are from a series developed by the Bureau of the Census based on Federal income tax returns.     

The effects of regional migration on gross income of labour in Sweden

In this article we study the effect of interregional migration on gross income of labour. The empirical analysis is based on Swedish household data for the period 1994 to 1995. We are primarily concerned with the allocation effect of migration on economic growth in an economy where the incentives for migration may be hampered by relatively high income taxes and transfers. A treatment-effect model for migration and income is estimated. The results indicate significant income gains from migration for the unemployed as well as for those who were employed prior to migration. The estimation results also indicate negative correlation between errors in the migration function and the income function. The hypothesis of no self-selection can be rejected.Received: 26 March 2003, Accepted: 29 October 2003, JEL Classification: J61, R23We acknowledge helpful comments by Karl-Gustaf Löfgren, Department of Economics, Umeå University, Kent Eliasson, Swedish Institute for Growth Policy Studies (ITPS), and three anonymous referees. Assistance by Roger Jacobsson, the Computer Centre of the University of Umeå (UMDAC) is appreciated.     

Accounting for spatial relationships in models of interstate population migration

This study focuses on the specification of distance and space in models of state-to-state population migration. Typically, space is captured by one or two simple variables that do not adequately model the spatial relationship between states. These are particularly poor measures for states with a common border, especially those with a metropolitan area located near the border. Four models of interstate population migration are developed, with increasingly complex specifications of space. The models are estimated using 1975 to 1980 migration data for the 48 contiguous states of the United States. Common borders and bordering metropolitan areas do influence interstate population flows. Models lacking a more detailed specification of space will lose explanatory power and suffer from biases.     

Independent and linked migration: Individual return of employment opportunity and household return of poverty status to African American interstate migration

The thrust of this study is to describe and contrast the determinants and outcomes of African-American interstate migration. We examine two types of migration outcomes – individual return to employment probability and household level return to poverty status. We investigate these motivations and outcomes based on a new typology of migration through the lens of household change that accompanies migration. We specify a pairwise two-stage probit model incorporating individual and state-level variables using Public Use Micro Sample data and various ecological data in the US. We show that independent migrants move to other states envisioning economic models of migration with migration as a derived response to opportunities, pressures, and constraints imposed by spatial inequalities in socioeconomic development. On the other hand, we demonstrate that linked migrants move to other states also for their economic need, but via kinship. In this case, the linked migrants' path does not follow the general pattern of economic circumstances. We show that household composition is an important factor that influences the destination choice for African Americans. While independent migrants are more concerned with diverse economic conditions at destinations, kinship, other ties and household structure at destinations are more significant factors for linked migrants. Received: June 2000/Accepted: June 2001     

Measuring interstate migration flows: an origin-destination network based on Internal Revenue Service records

"This paper examines gross interstate migration flows for five periods for the years between 1969 and 1978. The analysis is based upon a newly available data source--Federal income tax returns. Approximately 90% of the US population is covered by this data series. The matching of Internal Revenue Service (IRS) returns between filing dates enables the determination both of the origin and of the destination of migrants, with few of the risks of geographic miscoding present. "These data illustrate that despite divergent economic fluctuations over the past nine years, the patterns of interstate migration have remained virtually unchanged. With few exceptions, the number of migrants either leaving or entering a particular state comprise identical proportions over time.... In addition, these data offer considerable evidence that current residence has a significant impact on the selection of a destination." Comparisons are made with data from the Current Work History Sample and the 1970 census.     

Interstate migration of college freshmen

We examine the economic determinants of interstate migration of college-bound freshmen, using state-level data. Our analysis provides a robust explanation of the striking differences among the U.S. states in out-migration of college-bound freshmen. States that provide more educational choices and higher quality education services, charge lower tuition, have broad-based merit scholarship programs and have lower income levels tend to retain a higher percentage of their college-bound freshmen at home. We thank Andrew Mason, Sang-Hyop Lee and Rhonda Sharpe and two anonymous referees for helpful comments and suggestions.     

THE TAX EQUITY EFFECTS OF THE SUBSTITUTION OF MUNICIPAL ELECTRIC PROFITS FOR PROPERTY TAXES

Many municipalities own and operate the electric companies which service their population, or act as distributors of electricity which they purchase from privately owned electric companies. Municipalities will often sell electricity at a substantial profit which is credited to their General Fund and becomes a substitute for properly taxes. A case study of a Delaware municipality that follows this practice was examined to determine the impact of this practice on its local tax structure from the standpoint of tax equity. A sample of households provided data on income, property taxes, and electric usage. Profit from the sale of electricity was treated as an excise tax, and the relative burden of this tax on various income groups was compared to the relative burden of properly taxes to see which was more regressive. The study showed that the city should rely less on the electric excise tax and more on the property tax if it wished to improve the equity of its local tax structure. This case study suggests that municipalities which substitute electric profits for property taxes might improve the equity of their tax structure by amending this practice.     

Welfare effects of regional income taxes Results of an interregional CGE analysis for Germany

 This paper deals with the question, whether in a federal state the regions should obtain the right to levy regional income taxes. It is shown that a revenue sharing system influences the optimal income tax rates and causes distortions. In a federal system with other distorting taxes, several states and a revenue sharing system the welfare effects of regional income taxes can be positive or negative due to second best problems. Therefore the welfare effects of regional income taxes are computed by means of an interregional computable general equilibrium analysis (CGE). The results suggest that in the German federal economy the sign of the welfare effects of the introduction of regional income taxes is very sensitive to the particular institutional arrangements. Received: February 1996 / Accepted in revised form: April 1997     

The structure of interstate and interregional migration: 1965–1970

This study examines the structure present in interstate migration at the national level and interregional migration in the Western states in an attempt to identify the interrelationships that exist between the respective areal units. Places which act as important origins and destinations in the process are determined through the use of nodal and principal component analyses. It is found that the nation can be dichotomized into regions oriented towards the states of California and Florida and that the western part of the nation can also be regionalized into a small number of important migration fields. The centers of the majority of these fields are metropolitan areas. Such identification of the spatial organization provides a useful picture of the areal extents over which major attractive centers have influence.The author wishes to acknowledge the financial support of the Academic Senate Committee on Research, University of California, Santa Barbara, California.     

An analysis of the determinants of internal labor mobility in India

Summary Several variables have been chosen which might reasonably be expected to explain the interstate migration which has occurred in India. The independent variables used in the study explain a fairly high percentage of the variance in migration between states, and all variables except U_j are significant at the 5 percent level or better. The distance variable consistently has in absolute value the highest elasticity in the various estimated relationships, and it is the variable which contributes most in terms of addition to R². This result is similar to those of other studies dealing with both advanced and less-developed countries, but it appears that the deterring effects of distance may be greater in India than in other countries studied. Migration in India tends to be away from low-income states and toward high-income states, a finding which is similar to those for Ghana, Egypt, and Brazil. Migration also tends to be away from and to populous states, and while migration is away from highly urbanized states, it does not seem to be toward highly urbanized places in India,ceteris paribus. However, migration does tend to be in the direction of places which are urbanizing rapidly and away from places which are urbanizing slowly. There is evidence that in India mobility tends to increase with increased education; this finding is contrary to what was found for Ghana, Egypt, and Brazil. Migration in India also tends to be toward places which display relatively high levels of educational achievement.He is grateful to R. M. Rao for helpful comments, but accepts full responsibility for remaining shortcomings.     

An economic analysis of migration in Mexico

This paper analyzes internal migration in Mexico over the 1960–1970 period. A model of the determinants of migration is specified and estimated for aggregated interstate migration flows. The results show that distance serves as a significant deterrent to migration, that higher destination earlings levels are attractive to migrants, and that regions with high unemployment rates experience lower rates of in-migration. An unanticipated finding is that regions with higher earnings levels have greater rates of out-migration.The data are disaggregated to examine separate migration relationships for each state. The results are that distance is a lesser deterrent for those migrants with more accessible alternatives, that higher earnings levels reduce the deterring effects of distance, and that regions with higher earnings levels have lower associated elasticities of migration.It is concluded that economic factors have played a crucial role in internal migration and thus in the changing occupational and geographic structure of the Mexican labor force.This research was supported by Grant Number 1-RO-1-HD08567-01 from the Population and Reproduction Grants Branch, Center for Population Research, National Institute of Child Health and Human Development, United States Department of Health, Education, and Welfare. Part of this study was completed at the Food Research Institute, Stanford University, where J. R. Ladman was a Visiting Scholar. We are grateful to Barry Edmonston and Dudley Kirk for their helpful comments on an earlier draft of the paper. Responsibility for remaining shortcomings remains ours.     

The effect of basic employment and regional factors on net migration: A study for Washington state

Relationships between net migration and basic employment, income, and regional urbanization are examined using 1960–70 census data for the state of Washington. Regression analysis indicates that changes in employment in agriculture, forestry, fishing and mining and in manufacturing have a direct effect on the rate of net migration. Change in median family income is also directly related to net migration but the effect is not as strong as that of employment. Location by region has a substantial impact on net population shifts with net inflows attributable to the urbanization which occurred in western Washington from 1960 to 1970. The employment, income, and regional effects are clarified by explicitly recognizing rapid growth in educational, governmental and retirement activity and recent large increases in basic employment which occurred in two small groups of counties. Overall, the results indicate that while the rate of net migration is responsive to changes in basic employment and family income, it is also important to recognize regional factors such as urbanization.A special note of appreciation is expressed to Mr. Sharif Masud who developed background data used in the analysis. Work was conducted under Regional Project W-118 of the Agricultural Research Center, Washington State University.     

The Sales Tax Puzzle – Has the law of demand been repealed?

TRA86 removed the deductibility of state and local sales taxes from U.S. personal income taxes. This effectively increased the price to state governments of sales tax revenue relative to income tax revenues. This implies that state reliance on income taxes relative to sales taxes should have increased after TRA86 was implemented. Leading public finance economists investigated this in the period shortly following the reform and invariably found that the predicted substitution of income for sales taxes did not take place. In fact, several studies noted that state dependence on the sales tax increased relative to income taxes – hence the Sales Tax Puzzle. Several experts tried to rationalize their non-findings. These rationalizations are unconvincing. This paper asserts that the puzzle may be resolved in two different ways. The first, seemingly trivial, is that the analysis must incorporate sufficient time so as to allow for relatively complex adjustments. Our contributions here are to anchor this obvious point with a theoretical model related to earlier work of the authors, and an explicit empirical examination of the lag structures of individual states reactions to the comprehensive tax reform. The second demonstrates that the analysis must take into account regional shifts that were taking place in the U.S. during this period. When such compositional shifts involving political and deductibility patterns are explicitly introduced into the model, the paradoxical findings are resolved both in the long and in the short run. Our contribution here is a demonstration that the use of detailed state-level data, unlike any of the earlier work in this area, allows for the inclusion in the analysis of inter-regional shifts in various parameters. An additional contribution is the explicit use and emphasis of the propensity to itemize as an independent variable. The use of this variable ties this area of analysis of post tax reform behavior into a hitherto untapped strand of public-finance literature. The variable is both theoretically interesting, and proves to have experienced compositional shift patterns which help resolve the sales-tax puzzle paradox.     

Migration,economic opportunity,and the quality of life: An analysis for the United States according to race,sex, and age

In recent years, the increased concern with environmental matters and the quality of life has led to a propagation of studies on these topics. The present paper attempts to add to this literature by analyzing the impact of the quality of life on interstate migration in the United States over the 1965–1970 time period according to race, age, and sex traits of migrants. The results imply that such factors as climate, medical care, and pollution were all important factors.     

Accounting for migration in regional occupational employment projections

Occupational employment projections are one of the primary products produced by state labor market information agencies to assist with state and regional job training and worker assistance programs. In theory, the information from occupational employment forecasts should improve both interregional and intertemporal labor market efficiency through better matching between training efforts and job openings. Until recently, the projections methodology was predominantly a demand-requirements approach that failed to incorporate important labor supply effects and interstate/interregional dependencies. Recent research has focused on improving the labor supply specification. This paper reports on one such effort to evaluate the importance of interstate occupational migration and to develop methods to incorporate migration into the existing projections methodology. Initial results indicate that the total number of estimated job openings by occupation have to be revised significantly upwards when migration is taken into account.     

Interstate spillovers of private capital and public spending

The analysis estimates the economic returns on public spending by transportation and non-transportation functions vs. private capital, using a panel data set for 48 contiguous states from 1989 through 2002. These actual spending dollars are used as a more precise measure compared to apportioned state public capitals used in the existing literature. For each type of capital/spending, the interstate spillovers were constructed in such a way that different states are weighted by commodity flows across the states to reflect different degree of inter-state dependence. We find that when spending data rather than capital stock is used, all of the interstate spillover effects are negative and statistically significant, suggesting that infrastructure investment does not contribute to economic growth (at least not directly). Therefore, crowding out effects exist among states competing for both private and government funds, in particular if states are highly dependent on allocation of federal funds. These results confirm the finding that previously estimated positive coefficients reflect spurious correlation based on capital stocks and output.     

A note on opportunity costs and migration analysis

The hypothesis that opportunity costs associated with foregone alternatives in moving from region i to region j significantly affect the migration decision has been proposed by Levy and Wadycki in the context of a regression model of migration. Their results for Venezuela were highly successful and additional evidence reported by Wadycki with United States data for 1955–60 also substantiated the basic hypothesis.These previous attempts at including the concept of intervening opportunities into the regression model of migration employed definitions similar to Stouffer's seminal 1940 article on the subject of intervening opportunities. The present paper presents two alternative formulations for intervening opportunities and tests them with 1955–60 United States interstate migration data. In all cases we find that both the explanatory power of distance and its estimated elasticity fall substantially when we include the proxy variables for intervening opportunities. Furthermore, including these proxies increases the explanatory power of the migration model substantially. Proxy variables which employ Stouffer's 1960 reformulation of the concept of intervening opportunities prove superior in our empirical tests.     

The wax and wane of interstate migration patterns in the U.S.A. in the 1980s: a demographic effectiveness field perspective

The author analyzes the structure of temporal changes in U.S. internal migration over the period 1980-1988 using data from matched income tax returns. "A number of hypotheses are explored about how in-migration and out-migration fields wax and wane, thereby giving rise to the overall shifts in demographic effectiveness measured over the period. The results highlight the characteristics of recent (1980-88) shifts in U.S. internal migration patterns including net migration reversals from strong net in-migration to strong net out-migration for states with significant energy sectors, the stanching of net out-migration from many states of the American manufacturing belt, the turnaround to net in-migration for all of northern New England, and the continuance of highly effective net in-migration to the sunbelt states of Florida, Arizona, and Nevada."     

State taxes and economic growth revisited: have distortions changed?

Our focus is on the changing degree to which individuals and firms respond to state tax policy in the United States. If the economic environment of the past two decades has changed such that firms and individuals have greater mobility, the degree to which they act to avoid higher tax jurisdictions may be enhanced. Alternatively, if tax policies across states have converged, the responsiveness of economic activity to tax policy may have diminished. These potential dynamics may be manifest in, among other ways, a change in the degree to which variation in overall state tax burdens affect state economic growth. Results from a series of regressions using a panel of state-level data for the years 1985 through 2003 indicate that the degree to which higher tax burdens reduce economic growth has substantially diminished. For instance, results indicate that the negative effect of a $1,000 increase in state own-source revenues per capita had on the growth rate of private sector gross state product diminished from approximately negative 1.1 percentage-points in 1985 to virtually zero by 2003. This effect holds whether economic growth is measured as the growth rate of private sector gross state product or private sector employment in a state, whether tax collections are measured in inflation-adjusted per capita terms or as a share of state personal income, and whether we examine state taxes exclusively or combined state and local taxes.