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Nancy Chau, Cornell University
Migration Gravity, Networks, and Unemployment
Abstract: We develop and estimate a theory-consistent gravity equation for interregional migration flows in the presence of unemployment. Micro-founded in a setting where search friction regulates labor market transitions, we derive a migration gravity equation for bilateral mobility that embodies a co-determined local unemployment term. As a theory of migration, our model connects directly with longstanding migration puzzles (e.g. declining internal mobility) as well as more recent developments (e.g. home bias). As a model of unemployment, a migration gravity approach uncovers novel inter-regional roots of local unemployment, and furnishes an unemployment sufficient statistic interpretation to the familiar multilateral migration resistance term. We empirically test the predictions of the model using U.S. county-level data on bilateral migration and unemployment rates, bilateral connectedness data such as a Facebook friendship links, and instrumental variable identification based on a novel similarity index of counties' historical ethnic-composition.
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