Abstract
We examine whether bilateral regional migration flows are driven by the city’s quality of life (QL) or quality of business (QB). The QL and QB measures are constructed using (quality-adjusted) rents and wages in each city. QL and QB reflect the willingness to pay of households and firms, respectively, for local amenities. The measures are constructed for 31 urban areas in New Zealand using five-yearly census data covering 1986–2013. We adopt a gravity model of regional migration—augmented by destination and origin QL and QB—to model bilateral flows of working-age migrants (post-tertiary education and pre-retirement age). We also model flows between urban and rural areas and flows for the urban areas to and from overseas locations. We find different attractors for international versus domestic migrants according to the type of city amenity. International migrants are more attracted to cities with productive amenities, whereas domestic migrants are more attracted to places with consumption amenities. Thus, in deciding on the type of city amenity to enhance, city officials implicitly choose the type of migrant they attract as well as the type of city that may result.
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Notes
- 1.
Biagi and Dotzel (2018) survey interregional migration models.
- 2.
Ariu (2018) surveys international migration models.
- 3.
In Sect. 5.4, we discuss implications for our results of treating new migrants and returning New Zealanders as separate categories of migrants.
- 4.
For instance, after discussing monetary returns to regional migration, Sjaastad (1962) states (p. 86): “In addition, there will be a non-monetary component, again positive or negative, reflecting his preference for that place as compared to his former residence”.
- 5.
Formally, we treat migrant groups as being homogeneous within the relevant group, but as heterogeneous between groups. As we discuss subsequently, some heterogeneity within groups and different constraints facing different groups are both likely to influence the empirical findings.
- 6.
For our OLS estimates, we add one to the migration flow since Mijt enters the equation in logarithmic form; this enables us to include pairs of locations between which there is no migration in the estimation sample. This adjustment is not needed for our Poisson and negative binomial regressions.
- 7.
Ideally one would control for time-specific moving costs but these have not changed materially over our sample period. Estimates of effects of time-varying travel costs on migration show only minor differences (Poot et al. 2016).
- 8.
The exact estimated migration increase from a one standard deviation change in QL or QB will be 100*(eβ − 1)%.
- 9.
All of the urban areas in our data are located on either of New Zealand’s two major islands: North Island and South Island. New Zealand (with a population of 4.24 million in March 2013) has a land area of 268,000 km2 which is similar to that of the United Kingdom (242,000 km2).
- 10.
Grimes et al. (2017) provide an explicit model showing that individuals with a high rate of time preference will tend to move from a high consumption amenity area to a high income area over their lifetime, while those with a low rate of time preference will tend to move in the opposite direction.
- 11.
Note that the UtoUij dummy is omitted as a stand-alone variable to avoid perfect multi-collinearity.
- 12.
Urban areas that we combine are Northern Auckland Zone, Western Auckland Zone, Central Auckland Zone, and Southern Auckland Zone (into Auckland); Hamilton Zone, Cambridge Zone, and Te Awamatu Zone (into Hamilton); Wellington Zone, Lower Hutt Zone, Upper Hutt Zone, and Porirua Zone (into Wellington); Napier Zone and Hastings Zone (into Napier-Hastings).
- 13.
The resulting numbers contain some error due to census undercounting, etc.
- 14.
For instance, a migration flow of 58 is reported as 57 with probability 2/3 and as 60 with probability 1/3; a flow of 59 is reported as 57 with probability 1/3 and as 60 with probability of 2/3; a flow of 60 is reported as 60; and similarly for flows of 61 and 62 (where 63 replaces 57 as the alternative possibility).
- 15.
As with all other observations, one is then added to this value for the OLS estimates. Thus lnMijt = 0 for true zero flows, lnMijt ≈ 1.1 for suppressed flows, and lnMijt ≈ 2.0 for the lowest reported flows (of six).
- 16.
The distance information between urban areas was provided by the authors of Poot et al. (2016). For urban areas which we combined because they are contiguous, we took the average of the distance between each of the combined urban areas and the other location.
- 17.
Rents and wages are quality-adjusted at each census date. Rents are quality-adjusted by regressing actual rents on the number of rooms, number of bedrooms, dwelling type, and available heating types. Wages are quality-adjusted by regressing actual wages on age, gender, ethnicity, industry, birthplace, religion, and qualifications.
- 18.
We explored a further specification based on Eq. (5.1) that was estimated just for emigrants from Christchurch (one of New Zealand’s three largest cities) that suffered devastating earthquakes between 2006 and 2013. This specification explored whether estimated patterns of emigration from Christchurch changed following the (exogenous) earthquakes. We found no evidence of a change in the emigration pattern from Christchurch in relation to QL and QB following the earthquakes.
- 19.
This pattern is the opposite of what we might expect if it were the case that reductions in transport costs through the period had boosted migration flows.
- 20.
We note that the attractiveness of (expensive) high QB locations may be different for people at the start of their working careers (e.g. those aged under 25 years) and this group is (intentionally) omitted from our sample. Grimes et al. (2020) examine location choices of tertiary graduates with respect to QL and QB across potential destinations.
- 21.
The Poisson and negative binomial regressions do not require us to add one to migration flows to enable the zero flows to be included; however, we still need to impose an arbitrary flow (assumed to be two) for suppressed flows, which inevitably results in some inaccuracy. The negative binomial results are preferred to the Poisson regression results in this case since the data displays over-dispersion contrary to the assumptions of the Poisson approach.
- 22.
Stillman and Maré find that returning (New Zealand-born) migrants have a greater effect on house prices than do foreign-born migrants.
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Acknowledgements
We thank the MBIE-funded National Science Challenge 11: Building Better Homes, Towns and Cities for enabling this work.
Disclaimer
Access to the data used in this study was provided by Statistics New Zealand (SNZ) under conditions designed to give effect to the security and confidentiality provisions of the Statistics Act 1975. All frequency counts using Census data were subject to base three rounding in accordance with SNZ’s release policy for census data.
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Grimes, A., Preston, K., Maré, D., Badenhorst, S., Donovan, S. (2021). The Contrasting Importance of Quality of Life and Quality of Business for Domestic and International Migrants. In: Cochrane, W., Cameron, M.P., Alimi, O. (eds) Labor Markets, Migration, and Mobility. New Frontiers in Regional Science: Asian Perspectives, vol 45. Springer, Singapore. https://doi.org/10.1007/978-981-15-9275-1_5
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