Abstract:
More educated individuals are more likely to migrate to another region. There is a wide range of explanations for this stylised fact, most of which centre around differences in expected gains from migration. This paper demonstrates that, alongside differences in expected gains, the ease of finding a job in another region matters too. I establish a new stylised fact that shows that not only do the less educated move less, they are also significantly more likely to migrate speculatively, without a job lined up. In order to analyse whether these two stylised facts are related, I use data from a US panel to estimate a discrete choice model in which workers choose jointly their optimal location and employment. I also let worker’s job offer probability vary with the recruitment practices in their industry and occupation. The results show that individuals prefer to migrate into employment, which is why the relative lack of job offers from other regions for the less educated translates into their lower overall mobility. To evaluate the size of these cross-regional job search frictions, as well as to quantify their importance relative to the existing explanations, I develop a structural model of frictional job search across regions. The estimates of this model show that around a half of the migration propensity gap between the more and the less educated can be attributed to the differences in cross-regional opportunities. They also show that while search across regions is difficult for all unemployed alike, it is the ease of finding distant job offers when employed that generates most of the migration differences.