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Gross Migration, Housing and Urban Population Dynamics

Author

Listed:
  • Morris A. Davis
  • Jonas D. M. Fisher
  • Marcelo Veracierto
Abstract
Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practise local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population adjustments. Housing is also a natural candidate for slowing population adjustments because it is difficult to move, costly to build quickly, and a large durable stock makes a city attractive to potential migrants. We quantify the influence of migration and housing on urban population dynamics using a dynamic general equilibrium model of cities which incorporates a new theory of gross migration motivated by patterns we uncover in a panel of US cities. After assigning values to the model's parameters with an exactly identified procedure, we demonstrate that its implied dynamic responses to productivity shocks of population, gross migration, employment, wages, home construction and house prices strongly resemble those we estimate with our panel data. The empirically validated model implies that costs of attracting workers to cities drive slow population adjustments. Housing plays a very limited role.

Suggested Citation

  • Morris A. Davis & Jonas D. M. Fisher & Marcelo Veracierto, 2013. "Gross Migration, Housing and Urban Population Dynamics," Working Paper Series WP-2013-19, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-2013-19
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    References listed on IDEAS

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    Cited by:

    1. Gordon, Grey & Guerron-Quintana, Pablo, 2024. "On regional borrowing, default, and migration," Journal of International Economics, Elsevier, vol. 150(C).
    2. Davis, Morris A. & Fisher, Jonas D.M. & Veracierto, Marcelo, 2021. "Migration and urban economic dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    3. Plamen Nemov, 2015. "Regional Reallocation and Housing Markets in a Model of Frictional Migration," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 863-880, October.
    4. Howard, Greg & Liebersohn, Jack, 2021. "Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities," Journal of Urban Economics, Elsevier, vol. 124(C).
    5. Parkhomenko, Andrii, 2016. "Opportunity to Move: Macroeconomic Effects of Relocation Subsidies," MPRA Paper 75256, University Library of Munich, Germany.
    6. Davis, Morris A. & Van Nieuwerburgh, Stijn, 2015. "Housing, Finance, and the Macroeconomy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 753-811, Elsevier.
    7. Vives Coscojuela, Cecilia, 2015. "Geographical mobility and the labour market," IKERLANAK 15485, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.

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    More about this item

    Keywords

    Housing; house prices; labor reallocation;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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