Geoscience Reference
In-Depth Information
the bulk of the regional employment rate effects of a shock in year
t
are eliminated
by year
t
+5.
16.3.4 Interregional Migration
While (Eq.
16.3
) gradually returns the regional employment rate to baseline, this is
not the same as assuming that regional employment returns to baseline. We allow
for endogenous movements in the size of the regional workforce via interregional
migration, using a single-region variant of the migration theory described in
Giesecke and Madden (
2013
). This models interregional migration as a function
of per-capita regional income. Hereafter, we call the measure of income relevant to
the migration decision “migration income”, defined as:
Y
ðÞ
t
¼
W
t
ER
t
ð
16
:
4
Þ
where
Y
t
(
M
)
is migration income
W
t
is the LA-County real consumer wage; and
ER
t
is the LA-County employment rate.
We define disequilibrium in the regional migration income measure away from a
level consistent with a trend rate of net interregional migration via:
Y
ðÞ
t
Y
Diseq
ð
Þ
F
ðÞ
t
¼
ð
16
:
5
Þ
t
where
Y
t
(
Diseq
)
is a measure of disequilibrium in migration income
F
t
(
M
)
is a shift-variable for calibrating (Eq.
16.5
).
A plausible initial parameterisation of
(Eq.
16.5
)s
Y
t
(
Diseq
)
¼
1 and
F
t
(
M
)
Y
0
(
M
)
, where
Y
0
(
M
)
is the initial (base period) value for
Y
t
(
M
)
. As we shall
see, with such a parameterisation of (Eq.
16.5
), we have assumed that the base
period migration income measure is consistent with the trend level of net interre-
gional immigration.
In (Eq.
16.5
),
F
t
(
M
)
will normally be exogenous, while
Y
t
(
M
)
is determined by
(Eq.
16.4
) on the basis of regional labor market conditions (that is, outcomes for
W
t
and
ER
t
). Hence, (Eq.
16.5
) determines
Y
t
(
Diseq
)
. We assume that a rise in
Y
t
(
Diseq
)
will generate a rise in the net rate of inter-regional immigration of persons of
working age (
IMR
t
) via:
¼
h
i
G
t
Y
Diseq
ð
Þ
IMR
Trend
ð
Þ
IMR
t
=
¼
ð
16
:
6
Þ
t
We use an inverse logistic function to describe G (Fig.
16.1
). For modeling a
region's net immigration rate, this function has three useful properties. First, it
allows us to limit the minimum and maximum values for
IMR
t
within historically-
