Opinion and Economic Analysis

HICKS: When it comes to migration, people follow the money

January 23, 2010

The week before the Ravens/Colts game was especially worrisome for me. I was born in Baltimore, and was terribly troubled that someone would discover this before the Ravens departed Indianapolis with a loss to the Colts. I am much relieved.

During those sleepless nights, my mind turned, as it so often does, to the economics of the matter. I specifically thought about what the future is likely to hold for migration as we emerge from this recession.

We Americans are a mobile people. Good longitudinal data is sketchy, but perhaps half of us die in states different from that in which we were born. Annual survey data from the Census show interstate migration rates ranging from roughly one-in-five persons annually in the post-World War II generation to more than one-in-nine families in this century migrating from one state to another each year.

This is staggering. If moves are uniformly distributed across the population, that means every American would move once a decade. Over the three score and 10 years promised to us by the psalmist, the average American moves seven times. Of course, folks change residences based upon their own circumstances, which are not equally distributed.

Economists and demographers have long studied the causes of migration. A few important trends have emerged over the past several centuries. Of course, folks tend to migrate to warmer, sunnier and more tax-friendly places. The last of these favors Indiana. But, the most frequent finding is that the tendency to migrate is heavily correlated with individual human capital—primarily education. That doesn’t mean that if you live in the same house you were born in, you are the village idiot. It does, however, mean the village idiot has probably lived here his whole life.

The human capital link to migration is great news for places that are growing and attract lots of residents. It is an absolute catastrophe for places that suffer significant out-migration. It took Ireland a full century to recover from the mid-19th-century exodus. In a few American places, a generation or two of out-migration has crippled the population. It is an unpleasant fact that there are places in Appalachia and in the Plains states that have been reduced to third-world-like educational attainment due to out-migration.

Michigan today is experiencing this type of exodus. The most recent data from national moving companies suggest there are more than two residents leaving for every one moving into the state. This trend will increase as residents vote with their feet. The effects will last a generation.

In this century, Indiana has seen net migration of just about 1 percent. Illinois, Ohio and Michigan have all experienced migration losses of 1.3 percent, 2.2 percent and 3.2 percent, respectively. While the recession has played havoc with these numbers, the next decade will likely see a return to the pattern of human capital migrating to places of opportunity. Indiana’s low taxes make us such a place. That bodes well for this decade.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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