Abstract
A model of the spatial distribution of mobile heterogeneous agents is formulated to assess how a price change or program subsidy that is location-specific affects the composition of local residents via selective migration and thus biases evaluations of the effectiveness of the program based on its local consequences. Longitudinal data from Colombia are used to test the implications of migration selectivity. The findings confirm the existence of selective migration, suggesting that local subsidies to human capital attract high-income but, within income groups, low-fertility households and those with low human capital endowments. These migration patterns are shown to be consistent with the dominance of endowment over tastes heterogeneity in the population under plausible behavioral assumptions.
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