The Migration Accelerator: Labor Mobility, Housing, and Demand

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What is the role of migration in regional evolutions? I document that within-U.S. migration causes a reduction in the unemployment rate of the receiving city, over several years. To establish this causal effect, I construct an instrument using outmigration of other places and predict its destination from historical patterns. The decline in unemployment is due to housing. Housing is durable, so increased demand causes a surge of new houses and construction jobs. Additionally, migrants’ housing demand raises prices, increasing borrowing and non-tradable employment. This finding implies the endogenous response of migration amplifies local labor demand shocks by about 20 percent.
Original languageEnglish (US)
Pages (from-to)147-179
JournalAmerican Economic Journal: Macroeconomics
Issue number4
StatePublished - Oct 2020

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