Population Aging, Migration Spillovers, and the Decline in Interstate Migration

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractInterstate migration in the United States has declined by 50 percent since the mid-1980s. This paper studies the role of the aging population in this long-run decline. We argue that demographic changes trigger a general equilibrium effect in the labor market, which affects the migration rate of all workers. We document that an increase in the share of middle-aged workers (those ages 40 to 60) in the working-age population in one state causes a large fall in the migration rate of all workers in that state, regardless of their age. To understand this finding, we develop an equilibrium search model of many locations populated by workers whose moving costs differ. Firms prefer hiring local workers with high moving costs as they command lower wages due to their lower outside option. An increase in the share of middle-aged workers causes firms to recruit more from the local labor market instead of hiring from other locations, which increases the local job-finding rate and reduces everyone's migration rate ("migration spillovers"). Our model reproduces remarkably well several cross-sectional facts between population flows and the age structure of the labor force. Our quantitative analysis suggests that population aging accounts for about half of the observed decline, of which 75 percent is attributable to the general equilibrium effect.

Decomposing American immobility: Compositional and rate components of interstate, intrastate, and intracounty migration and mobility decline

“…In their study of the labor market impacts of migration decline, Molloy and colleagues (2014) note that while population aging accounts for nearly half of all declines in intracounty mobility since 1980, it accounts for effectively none of the slowdown in interstate migration over the same time period. Contrary to this report, however, Karahan and Rhee (2014) demonstrate that population aging plays a much larger but more subtle role in interstate migration decline than Molloy and colleagues allow. They find that the aging of the labor force and the growing share of middle-aged workers exert a calming equilibrium effect on the migration decisions of younger workers.…”

“…These results are consistent with several other studies that find substantial population aging effects. In their study of interstate migration decline since the mid-1980s, Karahan and Rhee (2014) find that about half of all interstate migration decline is attributable to population aging. Roughly 75% of this effect is direct, in that migration typically declines with age (e.g., Table 2), while the remaining 25% is attributable to age-group spillover effects, by which growth in the middle-aged working population (those 40 to 60) in a state reduces the migration rates of all other workers as well.…”

“…They find that the aging of the labor force and the growing share of middle-aged workers exert a calming equilibrium effect on the migration decisions of younger workers. In total, they find that about 50% of the observed decline in interstate migration since the mid-1980s can be attributed to population aging and its "spillover" effects on younger workers (Karahan and Rhee 2014). As such, it remains unclear how population aging and other compositional shifts, which some deem worthy of the moniker "Third Demographic Transition" (Coleman 2006;Lichter 2013), have influenced mobility and migration rates in the United States.…”

“…On the one hand, Molloy, Smith, and Wozniak (2014: 1) find that while population aging and rising homeownership rates explain about half of all local, intracounty mobility decline, effectively none of the decline in interstate mobility is attributable to these factors. On the other hand, Karahan and Rhee (2014) argue that at least half of all the slowdown in interstate mobility is attributable to population aging, particularly through the calming effect that middleaged workers have on the job transition decisions of younger workers.…”

Migration and the Demographic Shift

“…Finally, aging may have an additional spillover effect: the mobility of workers of all ages may decrease, as demonstrated in a recent study (Karahan and Rhee, 2014). The authors develop a model suggesting that with an increase in the share of older workers with higher moving costs it is more profitable for firms to hire more local workers as older workers accept lower wages.…”