Working paper No. 213. Human Capital Theory and Internal Migration

Empirical studies on internal labor migration are usually based on observed patterns of net flows into local labor markets with relatively lower unemployment and relatively higher real wages. Evidence here suggests that internal migrants move to enhance returns to their labor. In contrast, major surveys in the USA, the UK and Australia show that less than a third of internal migrants are motivated primarily by employment reasons. A possible explanation for this disconnect revolves around average and individual outcomes from migration. Using a sample of 39 000 Swedish regional migrants, this paper addresses this disconnect by examining the distribution of short and long term migrant income changes, and the factors that predict their placement within this distribution. We show that returns to migration do matter, especially for the more educated migrants. Overall, however, about a third of all migrants had negative short term returns to migration and about 40 percent make below median gains even in the long run. The data support a view that average outcomes are an insufficient way to measure the role of human capital motivated migration.

Related content: Human Capital Theory and Internal Migration: Do Average Outcomes Distort Our View of Migrant Motives?

Korpi, M. & Clark, W. A. V. (2013). ”Human Capital Theory and Internal Migration: do Average Outcomes Distort our View of Migrant Motives?”. Ratio Working paper No. 213.