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

The estimated coefficient of the dummy variable for a male being a farmer or otherwise self-employed is significantly different from zero at the 1% level. Having this occupational classification reduces the hazard of interstate migration by 83% for otherwise similar males, a very large effect, suggesting the occupational structure of jobs is an important factor affecting adult working-age males' tendency to stay at a particular location. Union membership decreases the male hazard of interstate migration, but the coefficient of UNION is significantly different from zero at only the 9% level. A male who has experienced unemployment is more likely to move, but the coefficient of UNEM in the hazard function is significantly different from zero only at the 7% level. Although we expressed uncertainty about the expected effect of an adult male being married on his hazard of interstate migration, being married actually reduces his probability of migration. This suggests that wives, on average, are well matched to the location where they are currently living. An adult male having an additional school-age child reduces his hazard of interstate migration by 20%.

When interpreting the effects of amenities on the male hazard of interstate migration, it is important to recall that the male's real wage residual has been adjusted for the market's valuation of these attributes at a new destination. Hence, the remaining direct effects of local amenities on the hazard rate of interstate migration capture effects that are not fully reflected in real wage differences, largely the crime rate at the origin. Our results show that the disamenity of having a higher local crime rate has a positive and significant effect on a male's hazard of interstate migration. It is significant at the 1% level, and at the margin a one percentage point increase in CRIME increases the hazard rate for interstate migration by about 7 %. None of the other amenity variables--PARKS, JAN, or JULY--significantly impact the male hazard rate of interstate migration, suggesting that these local amenities are adequately reflected in male real wage differences.

As expected, a white working-age male has a significantly higher hazard of interstate migration than does a nonwhite male, other things equal; the hazard of interstate migration is 77% higher for a white than nonwhite male.

Conclusions

This article provides new information on wage differentials of men and on their hazard of interstate migration. In contrast to Roback (1988), we find that the cost-of-living and location-specific amenities account for some, but not all, of the regional differences in real wage rates. Regional wage differences persist after controlling for local amenities/disamenities--urbanization, crime rate, and natural amenities. We used the difference between a male's actual real wage at the origin and his predicted real wage in the national labor market to proxy his wage incentive to migrate. This methodology has the advantage of creating a wage differential for all sample males, irrespective of whether they actually migrate. It also gets us free of endogeneity of the wage in a new destination for those who move. We showed that an increase in the male wage differential between origin and destination, higher fixed costs associated with moving, such as being a farmer or otherwise self-employed, or having school-age children, significantly decreases working-age males' hazard of interstate migration. Consistent with a range of migration studies, we find that males who have more education have a higher hazard of interstate migration.

A high crime rate at the origin, a disamenity, has a direct positive effect on the hazard of interstate migration. However, we find that natural amenities do not directly affect the hazard of interstate migration. This suggests that the local crime rate affects incentives to migrate differently than natural amenities. Our hazard model shows that migration is time dependent--the probability of a spell ending is low upon arrival at a location, increasing until a male has spent six years in residence, and thereafter, the likelihood of migration declines. Because of significant migration fixed costs and the disamenity of a high local crime rate, our results imply that interstate migration cannot be expected to fully equalize male real wage rates across state labor markets, which supports Roback's (1988) conclusion. Our empirical results are for the most part econometrically strong, and we feel quite confident generalizing them to U.S. adult working-age males in later time periods.

State policy-makers should be concerned about our results. They show that both cost-of-living and amenities impact spatial wage differences. Hence, if a state has disamenities--a highly urbanized population, high crime rate, or low January or July temperatures--wages will need to be higher to attract and keep workers. States may choose to pursue a high education policy, which will raise wage rates there, but it will also increase the probability of outmigration. To offset this effect, a state might pursue a policy that encourages self-employment of these highly educated individuals, for example, easing occupational licensing regulations and speedily issuing needed permits to start new businesses because self-employed farmers and others become quite immobile over time. These programs targeting the self-employed would be most effective if they structured some benefits to be distributed during year four through eight of residency, when the hazard of interstate migration is peaking and after which the likelihood of interstate migration declines dramatically. A state that has a high crime rate is at a major disadvantage when trying to keep or attract residents, and hence, investing in crime prevention could be a good long-term investment. For example, our results suggest that crime prevention is a better investment than state parks.

The authors thank Georgeanne Artz and Peter Orazem for helpful comments, Cindy Pease for editorial assistance, and the Iowa Agriculture and Home Economics Experiment Station for financial assistance.

[Received April 2005; accepted June 2006.]

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