Labor Mobility, Migration, and Regional Outcomes

Migration of people is one of the major influencing factors in determining the evolution of disparities, may it be between continents, countries, or even regions. Typically, investigated disparities are either in economic growth, wage levels, or unemployment rates. However, it still controversial if migration lowers these disparities, or not. This discussion comprises both, theoretical as well as empirical research. While the impacts of mobility between countries on national labor markets have been the focus of research for decades, mobility of workers across regions within countries have more recently become the object of interest. In the range of this research project the aim is to theoretically as well as empirically identify the impact channels and interdependencies of labor mobility and regional labor market outcomes. Thereby, the focus lies on disparities in unemployment rates across European regions. Within Europe, regions are defined by the Nomenclature des unités territoriales statistiques (NUTS) classification, and as such, are subject to European regional cohesion policy, such as structural funds. Therefore, the importance of this project lies in the determining why people from one region to another, and how this affects regional disparities in the light of these enormous cohesion efforts. Within this discussion, also the hypothesis on equal absolute impacts of immigration and emigration shall be tested. As preliminary theoretical considerations show, unemployment differentials and migration patterns can be both subject to underlying `fundamentals`, such as the locational characteristics of a region. In dependence on how shocks, for example increased accessibility of one or several regions, influence differentials and mobility, one can find either increasing or decreasing differentials through mobility. Therefore, a thorough examination and also improvement of theories of migration and unemployment dynamics appears warranted to be able to make clear-cut predictions about how differentials will evolve in dependence of increasing or decreasing mobility. Another aim of this project is to build a deeper theoretical understanding and empirical investigation of so-called structural gravity models. As the name suggests, this approach translates Newton`s law of gravitation to economic questions, such as trade relations or, in this case, migration flows from one particular region to another. A major upside of this approach is that it explicitly takes into account effects of all possible destinations a mover might have. Given bilateral data, that is, knowing where people come from and where they go to, it is possible to determine relevant push and pull factors more accurately. While frequently used in country-level investigations, regional applications have not yet come to a rise.

This FWF-Project has focused on regional labor markets and, specifically, on the decisions of workers to change their place of living to other regions as reaction to regional labor market disparities, such as large differentials in wage rates or unemployment rates. Data for Austrian districts reveal high disparities with regard to both wage rates and unemployment rates. People migrating to regions with high wage and low unemployment rates might alleviate this disparities and lead to convergence of both wages and unemployment rates across districts in the long run. In one of his papers contributing to the project Lorenz Fischer analyzes the determinants of migration flows between Austrian districts and shows that the size of these migration flows is much too small to reduce the evident regional labor market disparities. Beside high migration costs, non-economic motives might explain the low migration rates between Austrian districts. Overall the findings point to high persistence of the regional labor market disparities in Austria. In another contribution to the project Fanny Dellinger und Peter Huber investigate the role of welfare benefit levels on migrants' location choices within Austria. In Austria, asylum seekers are distributed across federal states according to a quota, but once they are granted protection, they are free to move wherever they want. More importantly, the paper provides a rare empirical test of the welfare magnet hypothesis in a natural experiment. The authors find, that that lower social benefits form a push factor and motivate refugees that are allowed to stay in Austria to look for work and a place to live in other states of Austria. In a companion paper Fanny Dellinger investigates the role of regional differences in housing support across Austrian states. These differences in housing support might affect the decisions of refugees with granted protection to leave their initial place of living (mostly moving to Vienna) and affect their probability to find a job. Preliminary results indicate positive effects of housing support on the probability of staying and successful integration into the labor markets. These positive effects are especially observed for young and unmarried men, that are more flexible and exhibit higher mobility.