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# More Gains to Moving for College Educated Workers

By Austin Herrick

Internal migration of working-age people in the United States has fallen by more than a third – from 18.86 percent in 1994 to 11.44 percent in 2018 (see Figure 1). This phenomenon has received significant scholarly attention – Cooke (2013)1 for example, attributes this decline to the rise of information and communication technologies. Alternatively, Molloy, Smith, and Wozniak (2011)2 point to broad macroeconomic shifts.

Reduced internal migration has important economic implications, particularly for labor markets. We find that wages grow faster for movers, especially for those with a college degree.

Source: Current Population Survey (1994 – 2018)

Figure 2 below shows observed wage growth for movers and non-movers over the last twenty years. As seen by the difference between the red and blue solid lines, the wage premium3 for moving over the last two decades has remained relatively constant, despite recessions (shaded gray) during the intervening years. The wage premium for moving suggests that migration improves matching between employers and employees.

Note: The shaded blue and red ares represent 95 percent confidence intervals.

Source: Current Population Survey (1994 – 2018)

We might expect declines in migration to be correlated with changes in the labor market. As labor markets weaken, the wage premium for movers may decrease. Firms may be less willing to pay a premium to attract new workers in an economy where many current workers are being laid off.

The available data has some limitations. We only observe movement behavior of individuals who make the decision to move, which fewer people did in the wake of the financial crises in 2001 and 2008. It is possible that the wage premium for moving for all workers has decreased over time, even as the marginal wage premium for moving has remained steady. That is, given fixed costs of moving, workers offered lower wage premiums for moving decided against movement altogether, biasing upward the average wage premium for moving. The premium’s increase in recent years indicates labor markets seeking new talent in a population of households still wary about movement.

This suggested pattern of firms searching for new movers becomes more plausible when examining movement patterns of adults based on educational attainment. In Figure 3, we see that the movement rate for college-educated adults fell significantly faster than their non-college educated peers beginning in the early 2000s. Interestingly, this decline stabilizes around 2011.

Source: Current Population Survey (1994 – 2018)

Further evidence of education’s effect on movement is shown in Figures 4 and 5, which display the wage premium of movers, conditioned on college degree attainment. From Figure 4, we see that the movement premium for non-college educated workers is often not statistically significantly above 0. Companies seem relatively unwilling to offer these less-educated workers a significant premium to induce movement, largely independent of economic conditions.

Note: The shaded blue and red ares represent 95 percent confidence intervals.

Source: Current Population Survey (1994 – 2018)

By contrast, in Figure 5, we see a highly significant wage premium for moving offered to college-educated workers. The data seems to reflect that college-educated workers are the primary recipients of the observed wage premium for movers.

This conclusion matches the results found by Gould (2007).4 In that study, Gould finds that higher urban wages are primarily driven by white-collar workers (a rough proxy for college education). Critically, the leveling-off of the college educated movement rate observed around 2011 maps onto the significant increase in the wage premium for moving observed for these workers in Figure 5. This observation supports the conclusion that wage premiums are successful in inducing movement.

Note: The shaded blue and red ares represent 95 percent confidence intervals.

Source: Current Population Survey (1994 – 2018)

We’ve identified that the wage premium for moving influences the decision to move. However, declining premiums only explain some of the puzzle - increasing premiums only stabilize, rather than reverse, internal migration rates, and movement has fallen dramatically over the past two decades. This suggests significant non-labor market factors affecting movement for American workers. We know the decision to move is influenced by the cost of moving and housing, among other things. A forthcoming post will explore the reasons why people report that they move.

1. Cooke, T. J. (2013). Internal Migration in Decline, The Professional Geographer, 65(4), 664-675. doi:10.1080/00330124.2012.724343  ↩

2. Molloy, R., Smith, C. L., & Wozniak, A. (2011). Internal Migration in the United States, Journal of Economic Perspectives, 25(3), 173-96.  ↩

3. The wage premium measures the ratio of wage increases for individuals who moved compared to non-movers. For example, if the average non-mover received a 2 percent raise, compared to a 3 percent raise for movers, the wage premium is 50 percent.  ↩

4. Gould, E. D. (2007). Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium, The Review of Economic Studies, 74(2), 477–506. doi:10.1111/j.1467-937X.2007.00428.x  ↩

  Value,Movers,StandardError
1994,18.860913,0.001304
1996,17.981096,0.001375
1997,18.09522,0.001368
1998,17.65817,0.001354
1999,17.486219,0.001343
2000,17.864216,0.001343
2001,16.023391,0.001019
2002,16.378894,0.001029
2003,15.574425,0.001008
2004,14.979454,0.000998
2005,15.25065,0.001013
2006,15.07861,0.001011
2007,14.386101,0.000995
2008,13.302812,0.000962
2009,13.777376,0.000972
2010,13.695174,0.000964
2011,12.661716,0.000941
2012,13.142633,0.000966
2013,12.98464,0.000961
2014,12.803088,0.000964
2015,12.940293,0.000971
2016,12.613803,0.000997
2017,12.608216,0.000997
2018,11.439719,0.000974

  Value,Movers,StandardError,Non-Movers,StandardError
1994,1.247495,0.016035,1.170402,0.005542
1996,1.26065,0.015858,1.172045,0.005603
1997,1.257741,0.015848,1.186335,0.005552
1998,1.3047,0.017126,1.205488,0.005668
1999,1.227436,0.015016,1.198246,0.005688
2000,1.256591,0.016263,1.187875,0.005621
2001,1.231814,0.018098,1.157326,0.005665
2002,1.186505,0.015139,1.171365,0.005269
2003,1.18962,0.014831,1.160491,0.005176
2004,1.201743,0.01623,1.159778,0.005399
2005,1.210759,0.017004,1.175856,0.005332
2006,1.225942,0.016924,1.177659,0.005276
2007,1.214335,0.016724,1.166409,0.005096
2008,1.222592,0.018108,1.140365,0.005089
2009,1.163884,0.018701,1.100223,0.004951
2010,1.177334,0.017306,1.157686,0.005289
2011,1.228495,0.019639,1.16902,0.005381
2012,1.213471,0.019047,1.176732,0.005478
2013,1.244533,0.020161,1.17721,0.005727
2014,1.278861,0.022376,1.182468,0.006285
2015,1.251548,0.019592,1.183309,0.006243
2016,1.246865,0.021362,1.179344,0.0065
2017,1.245718,0.020933,1.193169,0.006493

  Value,No College Degree,StandardError,College Degree,StandardError
1994,19.197801,0.001483,17.651563,0.002732
1996,18.226941,0.001571,17.158485,0.002841
1997,18.178303,0.001559,17.81851,0.002849
1998,17.708835,0.001548,17.494488,0.002793
1999,17.564441,0.001542,17.242727,0.002735
2000,18.050993,0.001546,17.294799,0.002716
2001,16.013412,0.001176,16.052715,0.00204
2002,16.46367,0.001195,16.134575,0.002026
2003,15.764783,0.001175,15.037159,0.00196
2004,15.169847,0.001166,14.450081,0.001929
2005,15.681302,0.001193,14.050111,0.001912
2006,15.735138,0.001199,13.272455,0.001865
2007,14.955941,0.001186,12.885191,0.001819
2008,13.822156,0.001151,11.978495,0.001741
2009,14.411261,0.001169,12.157264,0.001736
2010,14.277546,0.001156,12.215951,0.001736
2011,13.166185,0.001133,11.404628,0.00168
2012,13.576897,0.001165,12.081713,0.001722
2013,13.491182,0.001166,11.787578,0.00169
2014,12.868659,0.001156,12.650868,0.001746
2015,13.066364,0.001167,12.653443,0.00175
2016,12.557117,0.001195,12.738154,0.001809
2017,12.673547,0.001206,12.468703,0.001772
2018,11.17868,0.001171,11.969263,0.001752

  Value,Movers,StandardError,Non-Movers,StandardError
1994,1.253834,0.019427,1.177749,0.006713
1996,1.239843,0.018857,1.182977,0.006746
1997,1.254741,0.019438,1.193117,0.006695
1998,1.296529,0.021148,1.211375,0.006786
1999,1.217764,0.018452,1.213427,0.007005
2000,1.247774,0.020068,1.186785,0.00671
2001,1.235923,0.022139,1.177596,0.006926
2002,1.161341,0.017927,1.168079,0.006246
2003,1.188094,0.01795,1.166584,0.0064
2004,1.195718,0.020412,1.167584,0.006754
2005,1.210386,0.021383,1.184845,0.006551
2006,1.238538,0.021908,1.189329,0.006654
2007,1.205087,0.020417,1.177595,0.006408
2008,1.208936,0.023265,1.137078,0.00634
2009,1.168033,0.0239,1.117678,0.006307
2010,1.146471,0.021458,1.151063,0.006643
2011,1.193423,0.024071,1.184501,0.007009
2012,1.191912,0.024475,1.186343,0.007081
2013,1.210524,0.025662,1.194348,0.007481
2014,1.250835,0.030568,1.199435,0.008345
2015,1.219794,0.024938,1.200393,0.008242
2016,1.272122,0.028625,1.184169,0.00838
2017,1.260586,0.028073,1.208867,0.008574

  Value,Movers,StandardError,Non-Movers,StandardError
1994,1.228554,0.027638,1.148219,0.009518
1996,1.316511,0.029156,1.140625,0.009818
1997,1.26534,0.026775,1.166892,0.009743
1998,1.325323,0.028698,1.188617,0.010188
1999,1.250309,0.025628,1.157595,0.009452
2000,1.276157,0.027601,1.190844,0.010249
2001,1.222138,0.031195,1.104865,0.009633
2002,1.24169,0.027941,1.179674,0.009816
2003,1.193132,0.026362,1.145974,0.008672
2004,1.213804,0.026622,1.140915,0.008791
2005,1.21167,0.027175,1.15486,0.009105
2006,1.195057,0.024828,1.150662,0.008444
2007,1.233377,0.029148,1.141698,0.008258
2008,1.251646,0.028301,1.147409,0.008507
2009,1.155006,0.029246,1.064293,0.007808
2010,1.239162,0.029182,1.171014,0.008724
2011,1.30665,0.033848,1.139119,0.008189
2012,1.256258,0.030063,1.158842,0.008559
2013,1.304719,0.032466,1.145737,0.008737
2014,1.322299,0.032442,1.151953,0.009393
2015,1.306671,0.031608,1.152218,0.009316
2016,1.208228,0.031711,1.170972,0.010243
2017,1.220534,0.030614,1.166938,0.009826