Working Paper

Why are population flows so persistent?

Abstract: Extending the neoclassical growth model to allow for mobile labor, small shocks to a local economy's productivity or quality of life along with small frictions to capital and labor mobility effect extended equilibrium transition paths. During such transitions local population may be far away from its steady-state level but local wages and housing prices remain relatively close to their steady-state levels. Exogenous technological progress together with a partially elastic local housing supply imply steady-state population flows from high productivity to high quality-of-life economies. In addition, consumption smoothing causes steady-state population density to be history dependent. Empirical evidence suggests that some time around 1930, the United States experienced a shock which realigned productivity across its localities and which set in motion extended population flows. The data further suggest that some time around 1960,> quality-of-life considerations became more important in driving population flows and that a capital shock temporarily drove population flows during the 1970s.

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 1999

Number: RWP 99-13