Migration, fixed costs, and location-specific amenities: a hazard analysis for a panel of males.

Expectations about the signs of the [beta]'s are as follows. If a working-age male's real wage increases at his current location [W([ot.sub.is])], this will reduce the attractiveness of an interstate move, other things equal, and reduce his hazard of interstate migration. An increase in his real wage at a new destination [W([dt.sub.is])], other things equal, will increase his hazard of interstate migration. Although there is a stronger incentive for young adult males to migrate than older preretirement males, the hazard of interstate migration may not peak at a young age for working males (Greenwood 1997, pp. 655-656). Because an adult male's life is finite and the life cycle plays an important role in the timing of his human capital investment and family decisions, the marginal effect of his age [AGE([t.sub.is])] on the hazard of interstate migration may be nonlinear. Thus, [AGE.sup.2]([t.sub.is]) is also included as a regressor. We expect [[beta].sub.3] > 0 and [[beta].sub.4] < 0.

The next seven variables are associated with a working-age adult male's cost of migration. A male who has more education is expected to have a higher hazard of interstate migration, other things equal (i.e., [[beta].sub.5] > 0). Other studies have shown that an individual's education is associated with the ability to acquire and process information, and to make efficient decisions (Schultz 1975; Schwartz 1976; Huffman 1977), and this seems likely to extend to interstate migration. Moving to a new location carries some uncertainty, and additional education, which aids the acquisition and interpretation of information, can greatly reduce this uncertainty. Moreover, Detang-Dessendre and Molho (1999, 2000) have shown that an individual's schooling increases his/her hazard of migration.

If a working-age male is a farmer, he has control over farmland now and has knowledge of the local land market, but it may be difficult for him to acquire farmland in a new location. If he is a professional or trade association member, his income is linked to a local clientele base that also ties him to his current location (Pashigan 1979; Goss and Paul 1990). If he is a union member, he frequently has nontransferable seniority and pension rights. These attributes of an individual's local occupation are expected to increase his utility at his current residence relative to a new location and to reduce his hazard of interstate migration (i.e., [[beta].sub.6], [[beta].sub.7] < 0). When a working-age male experiences temporary unemployment, this reduces his opportunity cost of searching for a new location (Herzog and Schlottmann 1984; Pissarides and Wadsworth 1989; Goss and Paul 1990), and we expect his hazard of interstate migration to increase (i.e., [[beta].sub.8] > 0).

Spouses can either reduce or increase interstate mobility, depending on their current job and amenity matches. Having children is an irreversible decision, and children only know what they have experienced. Hence, for an adult male having school-aged children is expected to increase the psychological and monetary costs of an interstate move (Mincer 1978; Greenwood 1997, pp. 701-705) and to reduce the likelihood of a resident spell ending, e.g., [[beta].sub.10] < 0.

Local amenities at the origin, relative to those at a new destination, are expected to affect a working-age male's hazard of interstate migration (Greenwood 1997, pp. 676-677). We focus on the crime rate, land in state and national parks, and long-term normal July and January temperatures. A higher local crime rate against persons and against real property is a negative local public good for non-criminals, imposing psychic and self-protection costs and lowering the residents' utility, other things equal. Hence, we expect a larger value of CRIME to increase a working-age male's hazard of interstate migration, i.e., [[beta].sub.11] > 0, or to reduce resident duration. In contrast, local area parks provide a positive local public good, and can be expected to reduce a male's hazard for interstate migration (i.e., [[beta].sub.12] < 0). Long-term average January and July temperatures play an important role in home utility bills and affect the types of winter- and summer-season outdoor recreational opportunities that are available in an area. Some effects of weather, which have both cost of living and amenity dimensions, should be incorporated into local wage rates and create compensating differentials across states, but other effects may not (Roback 1988). If there are other effects, then [[beta].sub.13] and [[beta].sub.14] will be statistically different from zero.

White working-age males are expected to have a higher hazard of interstate migration, other things equal, than nonwhites (i.e., [[beta].sub.15] > 0), because discrimination against nonwhites limits the number of destinations where they can expect to be made better off by a move relative to their current location. In particular, Filler (1992) has shown that whites in the United States have greater opportunities for superior location moves than nonwhites. His finding suggests white males, on average, will experience a shorter duration at any location than nonwhite males, other things equal.

The Wage at Potential Destinations

An adult working male's expected real wage at a new location is an important variable for the hazard of interstate migration. It reflects a location choice that is endogenous, however, and is not generally available. Hence, we include a proxy variable for this opportunity wage (Wooldridge 2002, pp. 63-67, 83-86; Greene 2003, pp. 86-88). This proxy variable should have the property that it is correlated with the "true" but unobserved wage, but uncorrelated with the error term in the decision to migrate. Otherwise it should not be part of the structural model. If we assume that the U.S. interstate labor markets for males are approximately in equilibrium, then a hedonic wage equation fitted to data on male wages pooled across states provides a method for valuing individual and location-specific attributes (Hoch and Drake 1974; Kenny and Denslow 1980; Roback 1982; Rosen 1986; Topel 1986; Tokle and Huffman 1991). In particular, state labor market units provide valuable information about the parameters of the male-wage offer equation.

Following Kenny and Denslow (1980), Adams (1985), Topel (1986), and Tokle and Huffman (1991), we adopt a real hourly wage equation where differences in the cost of living are being adjusted for over time using the implicit price deflator for personal consumption expenditures (U.S. Dept. of Commerce) and across geography using state average land prices, normal January and July temperatures, extent of urbanization, and the crime rate:

(10)

[MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII]

where [EDU.sub.iy] denotes years of schooling completed by ith male in yth year, [EXP.sub.iy] denotes labor market experience computed as the ith male's AGE - EDU - 6 in years, [RACE.sub.iy] denotes an indicator for the ith male being white, [PLAND.sub.ky]/[P.sub.y] denotes the real price of land in state k where the ith male resides in year y, [URBAN.sub.ky] denotes the proportion of the population in the ith male's resident state k that is urban in year y, [CRIME.sub.ky] denotes the crime rate in the ith male's resident state k in year y, [JAN.sub.k] denotes the thirty-year average January temperature in the ith male's resident state k, [JULY.sub.k] denotes the thirty-year average July temperature in the ith male's resident state k, [PJOBGR.sub.ky] denotes predicted job growth in the ith male's resident state s in year y, [PURATE.sub.ky] denotes the predicted unemployment rate in the ith male's resident state s in year y, [RSHOCK.sub.ky] denotes the relative employment shock in the ith male's resident state s in year y, [RURATE.sub.ky] denotes the residual unemployment rate in the ith male's resident state s in year y, and [DS.sub.ky], [DW.sub.ky], and [DNC.sub.ky] denote that the ith male resides in census region South, West, or North Central, respectively. TIME and TIME-squared are included to allow for a possible long-term negative trend in male real wage rates (Blundell and MaCurdy 1999). (12) The [[zeta].sub.j]s are unknown parameters, and [[epsilon].sub.iky]' is a zero mean random disturbance term.

In equation (10), the real price of land ([PLAND.sub.ky]/[P.sub.y]) is a key proxy for local housing prices, and [URBAN.sub.ky], [CRIME.sub.ky], [JAN.sub.k], and [JULY.sub.k] are proxies for various local amenity attributes. By including the regional fixed effects and a time trend, we control for other omitted variables, and by doing so, our parameter estimates in equation (10) should have better statistical properties.

Sample mean values of the variables entering the hazard of interstate migration and the real wage are reported in tables 2 and 3, respectively.

The Empirical Results

This section reports the empirical results for the wage equation and for the hazard function of interstate migration.

A Male's Hedonic Wage Equation