Moving to a new city or country is costly, scary, and relatively few people do it. Only 3.5 percent of the global population lives in a different country from the one they were born in. Internal migration is harder to compare and aggregate, but UN data suggests approximately 763 million persons live within their own country but outside their region of birth – so in total, only around 1 in 7 of the World’s population have ever migrated even internally. This lack of movement matters a lot at both the personal and societal levels. It means most people’s incomes are determined by local labor market opportunities, and that the development process of reallocation of labor from less productive to more productive areas is limited.
A couple of new U.S. examples of the importance of location
I’ve recently come across a couple of great examples of the importance of location for income growth using data from the U.S. The first is a new working paper by Ben Sprung-Keyser, Nathaniel Hendren, and Sonya Porter, which uses confidential, geo-coded tax data, census records, and other data sources in the U.S. to look at migration rates across commuting zones between childhood and young adulthood. They find at age 26, 69% of individuals live in the commuting zone they grew up in, 80% have moved less than 100 miles, and 90% less than 500 miles, with migration distances shorter for Black and Hispanic individuals and those from low-income families. (Readers in other countries, remember the U.S. is big, so 100 miles doesn’t get you very far). They then estimate the elasticity of migration to wage shocks, and find that these elasticities are quite small, so that most of the wage gains to an increase in income in a location go to people who would have lived there anyway – and so, especially for poor and minority individuals, where they grow up almost completely determines their economic opportunities.
This coincides with a finding in the new book Streets of Gold: America’s Untold Story of Immigrant Success by Ran Abramitzky and Leah Boustan. Chapter 5 of the book shows that both historically, and in present day, children of immigrants are more upwardly mobile than children of the US born (here mobile is being used to indicate income mobility – moving up the income distribution). This was true in the 1880s, 1910s, and remains true today for children born in the 1980s, and occurs for almost every country of origin. A migrant child raised at the 25th percentile of the income distribution reaches the 51st percentile of the income distribution on average, compared to the 40th to 45th percentile for the average child of a white U.S.-born father, with lower mobility still for children of U.S.-born black fathers. They go through various explanations for this higher mobility, including the idea that immigrant parents place more emphasis on education, but find that one of the biggest factors explaining this income mobility difference is that immigrants to the U.S. tend to move to locations within the country that offer the best opportunities for upward income mobility for their kids. Where these areas are have changed over time, but immigrants tend to move to places with better job prospects – which does not trap their children in places with poor opportunities. Children of immigrants do better than the average child of U.S.-born parents, but do not earn more than children of U.S.-born parents who grow up in the same area. So the problem again is that many poor U.S. natives are in locations with poor job opportunities and yet do not move from these locations. (The New York Times had a nice summary and graphic visualization of this finding here).
So why don’t move people move?
Location is even more important for the job prospects of people in developing countries, and may become increasingly so in coming years as climate change makes some places less productive. This can lead to what Lant Pritchett refers to as “zombie economies”, where the economy is dead but people still live there. This makes it even more important to understand why people don’t move. In a new working paper, I review the evidence for different explanations for this lack of movement, and the implications for policy. I go through theory and evidence for a lot of the standard explanations offered in the literature, including incorrect information about the gains to migrating, liquidity constraints that prevent poor people paying the costs of moving, and high costs of movement that arise from both physical transportation costs and policy barriers that inhibit movement. These are all important, and there is certainly scope for policy efforts to better inform potential migrants of job opportunities elsewhere, provide them with credit to help them move, and refine policies to lower the barriers to movement.
Fears, tears, and the multiverse of things you give up by not moving
However, while these factors are important, I believe they are not the only, or maybe not even the most important, reasons why many people do not move. The economics literature has paid less attention to the fears people have when faced with the uncertainty of moving to a new place, and to the reasons behind the tears they shed when moving. In the paper, I try to explore these reasons in a bit more detail.
A big part of the reason people don’t move is because of the attachment they have to their current location, and the uncertainty they face about what a new place will be like. A typical model of the migration decision tends to lump this attachment to place as part of the so-called psychic costs of moving, capturing the cost of moving away from family and friends and community, and/or as direct utility from the amenities of a place (such as the cultural environment, favorite restaurants and running trails, etc.).
· Fears – while one may be able to get reasonable information on the likelihood of finding a job and the range of wages available elsewhere, it can be a lot harder to quantify in advance the other aspects that will change with moving – will I like living in this new place? What sort of friends will I make there? How safe will it be? Particularly if there is no network of people they know in the new place, then this fear of the unknown means that even if individuals are unhappy in their home location, they will be afraid to move.
· Tears – the literature typically takes these psychic costs as exogenous. But preferences may change with migration itself, making decision-making location-inconsistent. That is, I do not think we can simply rely on revealed-preference to observe that some people choose not to migrate, and therefore conclude that it would not be beneficial for them to do so given the information they have, liquidity constraints they face, the costs of moving, and their risk preferences. I go through various psychological biases that are likely to affect these choices, but one of them is a form of opportunity cost neglect and inability to picture what you are giving up by not moving. It is much easier to shed a tear for the friends you are leaving by moving, than it is for the friends you will make in the new location that you are giving up by not moving.
So this is where the idea of the multiverse comes in – if only we could observe the well-being of all the different versions of you who made different migration choices – which results in different jobs, incomes, friends, spouses, children, vacation spots, cultural opportunities, etc – and then choose the one that is the best, then we could be sure lack of migration really is because this is the best possible choice. But in the absence of teaming up with America Chavez, and travelling through different realities, what can policy do? This is an underexplored area, and one where more experimentation is needed. But some examples could include efforts to help potential migrants better visualize their lives under different migration choices (some new work is trying virtual reality for this); facilitating short-term visits or shorter-term migrations (some countries have programs like this to encourage high-skilled emigrants to see whether they would like to return); and thinking carefully about how location choices are framed to potential job-seekers, so that staying at home is not necessarily the status quo to which all else is compared.
As a final aside, I would argue that these biases mean that people typically move a lot less than is beneficial for them to do so, so that if you are on the margin between moving and not moving and can’t decide, you will likely be better off moving.