Is the grass really greener? Migrants' improvements in local labor market conditions and financial health

Abstract

This paper documents several facts about internal migrants in the US that underlie substantial areas of economic research and policy making, but are rarely directly published. Using a large-sample, 23-year panel, the Federal Reserve Bank of New York/Equifax Consumer Credit Panel, I estimate the distribution of changes in local labor market conditions experienced by people who move to a different labor market. Net migration favors local labor markets with lower unemployment and faster job growth, but gross flows toward weaker labor markets are almost as large as the flows toward stronger labor markets. During recessions, net flows temporarily favor weaker labor markets. Migrants frequently choose destinations with similar labor market conditions rather than moving to the markets with the highest growth or lowest unemployment at the time of their move. A hypothesis that personal financial health improves for people moving to tight local labor markets (or deteriorates for migrants to slack labor markets) is only partially supported in the data. Migrants to low-unemployment and high-employment growth regions have higher homeownership rates after they move. However, there are not clear advantages or disadvantages for migrants to strong or weak labor market regions as measured by credit scores, consumption, bankruptcy, or foreclosure.