MIGRATION, UNEMPLOYMENT, AND WAGES: THE CASE OF THE CALIFORNIA SAN JOAQUIN VALLEY

Abstract

The California San Joaquin Valley labor market appears to be at odds with basic economic principles in the sense that despite higher unemployment rates and lower wages, it has continually attracted an influx of in-migrants, domestic and international. By examining county-level data for the last two decades, the analysis in this paper is built around two main questions. First, in what proportion does local employment growth reduce local unemployment, increase labor force participation and attract outsiders who will likely take the newly created jobs? Second, to what extent regional migration rates respond to regional relative wages and unemployment differentials? Both questions aim to gain a better understanding of the San Joanquin Valley labor market and the migrants’ decisions to move there, which might shed light in the design and implementation of development policies aimed at reducing unemployment. Results provide evidence that market forces alone are insufficient to correct regional unemployment disparities. Three main findings are offered. First, in-migrants workers fill most of the newly created jobs. Second, migration seems unresponsive to the unemployment level but responsive to changes in farm income. Third, migration is sensitive to government-based benefits, property crime rates and housing prices. (JEL R11, R23, R58)