The Gift of Moving: Intergenerational Consequences of a Mobility Shock / Emi Nakamura, Jósef Sigurdsson, Jón Steinsson.

Format:

Book

Author/Creator:

Nakamura, Emi.

Contributor:

National Bureau of Economic Research.

Sigurdsson, Jósef.

Steinsson, Jón.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22392.

NBER working paper series no. w22392

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Gift of Moving

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We exploit a volcanic "experiment" to study the costs and benefits of geographic mobility. We show that moving costs (broadly defined) are very large and labor therefore does not flow to locations where it earns the highest returns. In our experiment, a third of the houses in a town were covered by lava. People living in these houses were much more likely to move away permanently. For those younger than 25 years old who were induced to move, the "lava shock" dramatically raised lifetime earnings and education. Yet, the benefits of moving were very unequally distributed within the family: Those older than 25 (the parents) were made slightly worse off by the shock. The large gains from moving for the young are surprising in light of the fact that the town affected by our volcanic experiment was (and is) a relatively high income town. We interpret our findings as evidence of the importance of comparative advantage: the gains to moving may be very large for those badly matched to the location they happened to be born in, even if differences in average income are small.

Notes:

Print version record

July 2016.