Abstract
Internal mobility is a critical component of economic growth and development, as it enables the reallocation of labor to more productive opportunities across sectors and regions. Using detailed district-to-district migration data from the 2001 Census of India, the paper highlights the role of state borders as significant impediments to internal mobility. The analysis finds that average migration between neighboring districts in the same state is at least 50 percent larger than neighboring districts on different sides of a state border, even after accounting for linguistic differences. Although the impact of state borders differs by education, age, and reason for migration, it is always large and significant. The paper suggests that inter-state mobility is inhibited by state-level entitlement schemes, ranging from access to subsidized goods through the public distribution system to the bias for states' own residents in access to tertiary education and public sector employment.
Highlights
Development and economic growth take place through the more efficient allocation of inputs among alternative productive uses
Migration between neighboring districts in the same state is at least 50 percent larger than migration between districts which are on different sides of a state border
This gap varies by education level, age and reason for migration, yet it is always large and significant
Summary
Development and economic growth take place through the more efficient allocation of inputs among alternative productive uses. It is no surprise that every successful development experience and growth episode is accompanied by large labor movements, especially from rural to urban areas, and from low to higher productivity sectors and occupations In this regard, India presents a paradox and daunting challenge. Our empirical analysis shows that, even when we control for numerous barriers to internal mobility, such as physical distance, linguistic differences and economic and social features of origin and destination districts (through district fixed effects), state borders continue to be important impediments. Helliwell (1997), for example, suggests that inter-provincial migration in Canadian provinces is almost 100 times more likely than migration to Canadian provinces from the United States These studies explore the role of international borders rather than the internal ones.
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