U.S Interstate Migration: A Rare Exception

Abstract

Abstract Recent studies show that during the Great Recession, US interstate migration (Americans moving from an origin state to a destination state within the US) continued a persistent, long-term downward trend. On the other hand, the Euro Zone experienced the opposite, as migration flows in many countries significantly increased throughout the Financial Crisis. Experts attribute the increases in migration flows to rising unemployment, as migrant workers leave suffering countries with increasing unemployment to those that offer more stable labor markets. Evidently, although the United States had maintained a steady downward trend in interstate migration flows throughout the Global Financial Crisis, many countries in the Euro Zone experienced rapid increases in both immigration and emigration. While several experts have found that increasing or decreasing unemployment rates nationwide were the main motivators to migration flows, our research shows that unemployment rate only tells a fraction of the story. Even more so, while current literature provides abundant documentation on the actual movement of people throughout the Global Financial Crisis, there lacks empirical evidence on what changing economic variables were the underlying causes of rapidly increasing migration in the Euro Zone and moderately decreasing migration in the United States. The goal of this research paper is to empirically unearth the economic motivators to migration, and shed light on why migratory reactions to economic downturn were so dissimilar between the United States and the Euro Zone. Through a series of multivariable regressions and state-by-state and country-by-country case studies, this study finds that current literature may have overstated the role of unemployment in motivating migration, as levels of unemployment were in fact statistically insignificant to outflow migration in the United States. Instead, the long-term downward trend in migration flows have been more significantly reactive to other deteriorating economic conditions such as decreasing GDP per capita, low social protection expenditures and busts in certain industries such as construction and financial services. Moreover, in addition to increasing unemployment rates, this study finds that GDP per capita and social protection were similarly significant drivers of migration in the Euro Zone. Finally, we suggest that while outflows were on steady declines, many Americans who did in fact relocate were high-skilled and educated workers, as severe downturns in high-skill intensive industries may have significantly motivated migration. This was also the case in Europe, where younger and educated residents were more likely to relocate.