The Unassuming Economist

From a paper by Andrea Foschi, Christopher L. House, Christian Proebsting, and Linda L. Tesar:

“We examine the responsiveness of labor participation, unemployment and labor migration to
exogenous variations in labor demand. Our empirical approach considers four instruments
for regional labor demand commonly used in the literature. Empirically, we find that labor
migration is a significant margin of adjustment for all our instruments. Following an increase
in regional labor demand, the initial increase in employment is accounted for mainly through
a reduction in unemployment. Over time however, net labor in-migration becomes the dominant
factor contributing to increased regional employment. After 5 years, roughly 60 percent
of the increase in employment is explained by the change in population. Responses of labor
migration are strongest for individuals aged 20-35. Based on historical data back to the
1950s, we find no evidence of a decline in the elasticity of migration to changes in employment.”