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Local Ties in Spatial Equilibrium

  • Mike Zabek
American Economic Journal: Macroeconomics
vol. 16, no. 2, April 2024
(pp. 287-317)
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Abstract

Someone who lives in an economically depressed place was probably born there. And having workers with local ties who prefer to live in their birthplaces leads to smaller migration responses in depressed places. Smaller migration responses lead to lower real incomes and make incomes more volatile, a form of hysteresis. Local ties can also persist for generations. Subsidies to economically depressed places cause smaller distortions, because few people want to move to depressed places. Finally, subsidies to productive places increase aggregate productivity, as they induce more migration.

Citation

Zabek, Mike. 2024. "Local Ties in Spatial Equilibrium." American Economic Journal: Macroeconomics, 16 (2): 287-317. DOI: 10.1257/mac.20210326

Additional Materials

JEL Classification

  • J22 Time Allocation and Labor Supply
  • J23 Labor Demand
  • J31 Wage Level and Structure; Wage Differentials
  • J61 Geographic Labor Mobility; Immigrant Workers
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
  • Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
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