Population aging, migration spillovers, and the decline in interstate migration

Arbeitspapier

Interstate 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 everyon'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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 699

Classification and Topics

• Classification: Wirtschaft ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Demographic Trends, Macroeconomic Effects, and Forecasts ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Geographic Labor Mobility; Immigrant Workers ; Size and Spatial Distributions of Regional Economic Activity ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
• Subject: interstate migration ; labor mobility ; population aging

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Karahan, Fatih ; Rhee, Serena
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/120823
• Last update: 10.03.2025, 11:44 AM CET