The Impact of State Borders on Mobility and Regional Labor Market Adjustments
Early Career Research Grant
I document a new empirical pattern of internal migration in the US. Namely, that county-to-county migration drops off discretely at state borders. People are approximately twice as likely to move to a county 20 miles away, in the same state, than to move to an equally distant county in a different state. This pattern is not explained by differences in county characteristics, administrative adjustment costs, or state regulation costs. However, county-to-county commuting follows a similar pattern as does social connectedness (as measured by the number of Facebook linkages). This is consistent with incomplete information about cross-border opportunities, but also consistent with the loss of a social network or geographic identity playing a role. Given the role migration plays in equilibrating labor markets after local shocks, this migration friction might have important implications on how labor markets adjust. Building on the established regional evolutions literature (Blanchard & Katz, 1992), I will estimate how migration frictions introduced by state borders affect the adjustment of regional labor markets in response to both positive and negative labor market shocks. This can potentially shed new light on why some regions recover quickly from local shocks while other regions are slow to recover.