Saturday, April 14, 2012

Why the Decline in Interstate Migration?

Another demographic mystery may have been solved. That mystery is the decline in interstate migration, a decline that started well before the record low migration rates of the Great Recession years.

Two decades ago in the early 1990s, about 3 percent of Americans moved between states each year, say researchers from the Federal Reserve Bank of Minneapolis. Today, only about half that many move across state lines. To determine why interstate migration has fallen so dramatically, the researchers rule out a number of possible factors including the aging of the population and the increase in dual-income couples. But their analysis uncovers two other factors that may explain the decline:

"The first explanation is that better information--due to both information technology and falling travel costs--has made locations less of an experience good, reducing the need for young people to experiment with living in different places," say the researchers.

"The second explanation is that labor markets around the country have become more similar in the returns they offer to particular skills, so workers need not move to a particular place to maximize the return on their idiosyncratic abilities," they conclude.

Source: Federal Reserve Bank of Minneapolis, Understanding the Long-Run Decline in Interstate Migration, Greg Kaplan and Sam Schulhofer-Wohl, Working Paper 697, April 2012

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