The Role of Unemployment in Triggering Internal Labor Migration

Levy Economics Institute Working Paper No. 75

52 Pages Posted: 28 Sep 1999

Date Written: June 1992

Abstract

George McCarthy's paper explores the internal migration of labor in response to structural changes in the U.S. economy. He presents an empirical study of the relationship between wage determination and the migration decision to evaluate the role of both spatial wage differences and unemployment in motivating migration. Also, the paper assesses the relative homogeneity of the population pertaining to migration and wage determination.

Orthodox analyses label the economic actor as an autonomous agent seeking to maximize lifetime utility. McCarthy uses data from the National Longitudinal Survey of the Labor Market Experience of Youth to assess the unemployment and wage motivations for migratory behavior among young males. The findings suggest that unemployment (e.g., the condition of being unemployed at point of origin and the unemployment rate at the point of destination) plays a larger role in prompting migration than spatial wage differences, and heterogeneity exists within the population with regard to migration--for example, it is implied that a person who has migrated previously is more prone to migrate again.

The results challenge the validity of regarding labor and capital mobility as similarly motivated. Moreover, the conclusion is in contrast to the human capital view of migration as a voluntary investment decision: "Akin to the decision of labor to work or starve, migration involves the decision to move or adapt to a lower standard of living. To treat this as a voluntary decision is ludicrous." The public policy responses to address this problem can employ two distinct lines of attack: enhance the mobility of labor (e.g., increase skill or education levels) and minimize the social costs of mobility, or impede the mobility of capital by weakening its bargaining position through legislative action.

JEL Classification: J61

Suggested Citation

McCarthy, George W., The Role of Unemployment in Triggering Internal Labor Migration (June 1992). Levy Economics Institute Working Paper No. 75, Available at SSRN: https://ssrn.com/abstract=161020 or http://dx.doi.org/10.2139/ssrn.161020

George W. McCarthy (Contact Author)

Bard College ( email )

Blithewood
The Jerome Levy Economics Institute
Annandale-on-Hudson, NY 12504
United States

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