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Dual-earner migration. Earnings gains, employment and self-selection

Abstract

This paper examines how spouses in dual-earner couples weigh each partner’s expected wage growth in the decision to migrate. Previous research suggests that husbands’ job prospects dominate the migration choice irrespective of their relative earnings potential. Based on British panel data, this paper employs an endogenous switching model and estimates wage differentials of migrating vs. staying for husbands and wives corrected for double selectivity of migration and employment. Dual-earner couples attach a positive weight to each partner’s expected wage gains when deciding to migrate. Moreover, migrant wives’ employment decreases temporarily, and there are significant selection effects in migration and employment amongst non-migrants.

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Notes

  1. Several authors have shown that labour force participation choices may differ between women who migrate and women who do not, for example because female migrants might temporarily withdraw from the labour force in order to accommodate increased household needs in the first years following a move.

  2. In the BHPS, Local Authority Districts are aggregated if their population falls below 120,000. Therefore, 278 separate areas can be identified instead of the 354 different Local Authority Districts.

  3. Boundary-based definitions of migration are most commonly used in the migration literature. Alternative definitions are based on distance moved, on self-reported motivations for moving, and/or on information about changing jobs. Each of these definitions is not without problems and potentially risks misclassification of migration and residential mobility. This paper uses the boundary-based definition because (1) this makes the results compatible with previous research using this definition; (2) recent research has suggested that distance moved is an inadequate criterion to distinguish migration and residential mobility, as a significant proportion of short-distance moves have employment explanations, and both long and short distance moves are at least partially motivated by housing adjustment reasons (Clark and Davies Whithers 2007); and (3) a definition based on geographical boundaries allows using region-of-origin characteristics to explain migration, under the assumption that distinct geographies exhibit distinct economic situations.

  4. There are also practical concerns about the use of these variables in a switching regression regime. Some variables may be endogenous to migration, for example by future migrants selecting into private rented accommodation in anticipation of a move. It is not appropriate to assume the ‘premium’ associated with private renting for migrants to be available to non-migrants renting houses. Moreover, some characteristics will change as a result of migration. For example, couples moving away from London and the South East should not be attributed the wage premium associated with working in these regions post-migration. Any regional effects on wages will be captured in the coefficients of the wage equations which can be interpreted as the average ‘price’ attached to human capital in potential destinations. Job characteristics such as occupational status, being on a fixed term job and working hours may also change as a result of migration but there are likely to be ‘scarring effects’ on future wages.

  5. House price data are from Halifax Housing Research on average annual house prices at UK post-town level from 1990–2005. These data were aggregated to BHPS Local Authority District level.

  6. Bootstrapping is a nonparametric approach for evaluating the distribution of a statistic based on random resampling with replacement. All stages of the estimation procedure are estimated using the bootstrap sample. Confidence intervals are derived, and the sample standard deviation is calculated from the sampling distribution (Guan 2003).

  7. I enter the husband’s age and the age difference between husband and wife to avoid collinearity between the variables. Because women are on average younger than their partners, a positive coefficient on the age difference is in line with expectations.

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Acknowledgements

I am grateful to three anonymous referees for their constructive comments and suggestions. I would like to thank John Ermisch, Axel Heitmueller, Stephen P. Jenkins, Cheti Nicoletti and Mark Taylor for comments on earlier versions of the paper.

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Correspondence to Birgitta Rabe.

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Responsible editor: Klaus F. Zimmermann

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Rabe, B. Dual-earner migration. Earnings gains, employment and self-selection. J Popul Econ 24, 477–497 (2011). https://doi.org/10.1007/s00148-009-0292-1

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Keywords

  • Family migration
  • Dual-earner couples
  • Double selection

JEL Classification

  • J61
  • D19
  • C35