Interstate Migration Has Fallen Less Than You Think

One of the exceptional things about the U.S. is how mobile our workers are.? It means that worker shortages in North Dakota won’t last long, as workers will move there from jobless Nevada.? There’s been a lot of concern that the housing crisis has halted this important adjustment mechanism.??According to the Census Bureau, the number of people moving across state lines has plummeted in recent years.? Problem is: It’s just not true.

But you’ve got to be a true data hound to figure out just what is going on.? Fortunately, my Penn colleague (and fellow Aussie economist)?Greg Kaplan, in?a recent paper with?Sam Schulhofer-Wohl, has done the necessary detective work.? It’s a fun story of just how deeply you need to dig before you can?really trust even Census data.? And Census data are among the best we have.

The interstate migration data come from the Census Bureau question asking whether you have moved in the past year, and if so, where from.? But about one-in-ten people don’t answer the question.? Census Bureau statisticians impute answers for these folks, but how they do this imputation has changed.? What they currently do makes a lot of sense: They find someone with similar characteristics who lived nearby, and impute answers based on whether that person had moved, and where from.? But here’s the problem: Prior to 2006, their imputations were typically based on people who lived a bit further away.? Consequently, they were likely to impute that if you had moved, you had moved from a bit further away.? This artificially made it a bit more likely that they would record you as having moved across state lines.? Because interstate migration is still relatively rare, even a small number of extra moves across state lines had a big effect.

Bottom line: Much of the observed decline in interstate migration is due to a change from a bad imputation procedure, to something more realistic.? The graph below shows how much this matters.? The blue line is the official Census statistics.? You can see just why macroeconomists were so worried about a dramatic decline in interstate migration.? The red line shows the interstate migration rate among those people who actually answered the question about whether they had moved.? And when you focus on the real data, interstate migration is slowing a little, but there’s nothing dramatic here – it’s just part of a longer-run trend.

I’m all for the Census Bureau improving their imputation techniques.? But this time it led them to publish time series that are problematic in ways that are so hidden that no policy analyst could possibly have guessed what was going on. That’s a real concern.? And despite their detective work, the authors still don’t know what caused the sharp shift around 1999.

Hat tip:?Andrew Gelman.

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  1. Brett says:

    Forgive my ignorance on this subject… why are interstate migration declines such a bad thing? I’m sure there’s a threshold where an extremely low number of movers makes moving more difficult or less desirable, but who knows where that threshold is?

    To me, I look at this and wonder if this is, in part, due to advancements in telecommuting… which to me is a great reason to not move. I get to be where I want without worrying about my company’s location, my company can choose where they want to be without worrying about potential employee location… sounds like an overall increase in economic efficiencies.

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  2. Drill-Baby-Drill Drill Team says:

    In a big recession, regions of the country are variously impacted and ideally workers go to where the jobs are. However this Great Recession is compounded by a Housing Bubble which trap workers in underwater mortgages and prevent free migration.

    If our Real Estate Boom and Bust will follow precedent, one of the greatest effects of the collapse of the Japanese Real Estate Bubble, is that people were trapped in their homes for the last two decades. No upward or even downward mobility. Sellers did not want to sell underwater homes in a down market. Unemployed could not move to where the jobs are.

    This is INTERNAL MIGRATION.

    However, EXTERNAL MIGRATION is an even more telling story. We will know life is getting hard and bleak if we see Transnational Emmigration(ie. Young Americans LEAVING the US for better prospects abroad.) Historically this has never happened in a land of Immigrants. I think in part is the lack of language skills.

    I would like to know WHERE American Emmigrants are moving? Canada and Mexico are convenient, but the greatest growth is in the BRICs.

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  3. Gary says:

    The examples of imputation in datasets that I’ve seen make me less confident in the data. What is the value of introducing uncertainty that is impossible to fully understand? Just admitting that a fraction of the data is unknown keeps the uncertainty within familiar bounds.

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  4. Eduard Beckstein says:

    “one-in-ten people”
    Too small to matter, really.

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  5. James says:

    I wonder why the real estate market would have all that much effect on people moving for jobs, because surely (my experience, anyway) is that those who own their houses are far less likely to move than renters.

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  6. jonathan says:

    And the bad news is we’re less mobile than we want to believe we are. Which goes along with the decreased income mobility year-to-year and generation-to-generation.

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  7. Doc says:

    Problematic Census data are nothing new. Market analysts often ignore them and look at real-world data like the interstate moving van line reports (thank you ICC) and other sources such as utility transfers. But at the margin, there is no question that the housing situation is a negative influence on labor mobility. Relying on macro data is always risky. Consider the socio-economic distribution of homeowners in default. There is a higher probability that they line up with that part of the labor force that has been negatively affected by the recession and thus have a higher need for mobility. Facing a foreclosure, mobility is tough on two axes. First, it’s difficult to walk away from a home even if it’s upside down. Second, those in default probably have damaged credit reports which will make both hiring and renting more difficult. In addition, some parts of the labor force have historically higher mobility such as construction trades (for whom there is little work today) while some parts of the labor force such as auto workers have other constraints on mobility that may arise from unions like the UAW.

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  8. Kristine A says:

    My husband and I have moved 14 times in 10 years and owned 4 homes in 4 different states. We are currently upside-down on our current home (we’ve lived here longer than any other location, 4 years) and yes, it will play a LARGE part in whether my husband will be able to move up the ladder after graduating with his master’s degree next May.

    My husband’s occupation is one in which the jobs are concentrated in large cities with universities – far away from where we are now. And it is a service oriented job – no telecommuting here.

    We are currently preparing to take about a 20% loss (this includes paying the ridiculous realtor’s fees) when after the first snowstorm our ceiling started falling onto our hardwood floors. Hello $8k roofing bill. Let’s readjust that estimate to 25% shall we?

    While it’s good to know workers out there are still mobile — from personal experience I’d say the housing market has serious repercussions on our career path in the immediate future.

    p.s. Anyone looking to buy a 5 bed 2 bath ranch in Idaho?

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