A Revealed-Preference Approach to Measuring Information Frictions in Migration Decisions

Eduardo Morales.

(Princeton University).

A Revealed-Preference Approach to Measuring Information Frictions in Migration Decisions.

Abstract

“Labor demand shocks differ widely across regions within countries. Yet, migration patterns often do not respond to these regional shocks. Are workers’ limited migration responses due to lack of information about the potential net gains from regional migration? To answer this question, we analyze the mobility decisions of all formally employed workers in Brazil over 15 years. First, using a reduced-form approach, we document heterogeneous delay in reaction to positive local labor demand shocks: workers living in more distant regions and in regions with a lower degree of internet penetration tend to react more slowly to positive local labor demand shocks happening in other regions within the same country. Second, using a structural approach, we use model-based moment conditions and tests of overidentifying restrictions to test for the content of migrants’ information sets. Our preliminary results indicate that the precision of the information that workers have about labor market conditions in regions other than their region of residence decays strongly with distance. Agents located in regions with a better access to internet also appear to have more precise information.”

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