The Unassuming Economist

Building upon their earlier work on the same topic, economists Monica Langella and Alan Manning of the Centre for Economic Performance, London School of Economics, further assess spatial differences and trends in internal migration to understand unemployment adjustment in the United Kingdom.

Abstract– “This paper uses UK census data to investigate how unemployment affects residential mobility using small areas as potential destinations and origins and four decades of data. It finds that both in- and out-migration are affected by local unemployment – but also that there is a very high ‘cost of distance’, so most moves are very local. We complement the study with individual longitudinal data to analyse individual heterogeneities in mobility. We show that elasticities to local unemployment are different across people with different characteristics. For instance, people who are better educated are more sensitive, the same applies to homeowners. Ethnic minorities are on average less sensitive to local unemployment rates and tend to end up in higher unemployment areas when moving.”

The paper offers comprehensive coverage of contrasting evidence, which on one hand shows that theoretically migration from economically depressed to booming areas must tackle unemployment, but on the other makes one question if this principle still holds owing to empirical results found from studies conducted in the US labor market (M. Dao, D. Furceri, P. Loungani, 2017). It proceeds to offer reasons to support the claim that migration response to economic booms has been observed to slow down on several instances, and reconciles the diverse range of evidence available from experiences of different countries.

Click here to read the full paper.