Time: 9:30 am- 11:00 am, Nov. 10th, 2023
Speaker: Rafael Dix-Carneiro
Meeting ID: 429 978 548 050
We examine how to interpret estimates from a commonly used migration regression relating changes in local population to exogenous local labor demand shocks. Using a simple model of local labor markets with mobility costs, we find that most conclusions drawn from migration regression estimates are likely to be substantially misleading. Intuitively, the conventional migration regression is misspecified due to the bilateral nature of location choices. Workers choose where to live based not only on the shock to their current location, but also on the shocks to potential alternative locations, which are omitted from the regression. Analytical results and simulations based on Brazilian data show that conventional migration regression estimates are inaccurate for the local population effects of either shocks to individual locations or all observed shocks taken together and often substantially understate the amount of worker reallocation driven by observed shocks. These problems are particularly acute when workers face industry switching costs in addition to geographic mobility costs. Simple alternative approaches leveraging the model’s structure exhibit far better performance.
Professor Rafael Dix-Carneiro is an Associate Professor of Economics at Duke University; holds affiliations to the National Bureau of Economic Research (NBER) and the Bureau for Research and Economic Analysis of Development (BREAD); is an Associate Editor at Quantitative Economics and was previously an Editor at Economia, the Journal of LACEA. His work focuses on the labor market adjustment process in response to globalization and trade liberalization, including i) the dynamics of adjustment to trade and ii) the margins of adjustment to trade. Additional research includes how trade-oriented firms respond to exchange rate fluctuations and the impact of economic shocks on crime. His research has been published in journals such as Econometrica, American Economic Review and Quarterly Journal of Economics. Professor Dix-Carneiro started his academic career as an Assistant Professor at the University of Maryland after completing his PhD at Princeton University in 2011.