Abstract
A central question in labor economics has been the extent to which local economic conditions impact labor migration. This question is of particular importance given that migration is a fundamental outcome of local economic growth and decline, as well as a primary mechanism of regional labor market adjustment. Surprisingly, the existing literature provides relatively few causal estimates of this relationship. In this paper, I exploit exogenous variation in local labor market conditions to estimate the impact of economic growth on net migration. The boom in oil production in the Bakken formation covering parts of Montana, North Dakota, and South Dakota created an unexpected labor demand shock that increased earnings, particularly for oil counties. Using the value of county oil reserves as an instrument for earnings, I estimate a causal relationship between local economic conditions and migration. I find a semi-elasticity of net migration with respect to county earnings of 0.2. My estimates suggest that the oil boom led to a 2.6 percentage point increase in the net migration rate for oil counties in North Dakota, consistent with basic models of local labor markets and migration.
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