Where is the grass greener? A micro-founded model of migration with application to Guangdong

Abstract

Abstract: This paper first develops a structural micro-founded model of aggregate net migration flow using matching ideas to study how migrants choose between multiple locations using multiple criteria. Migration should reduce inequality in the criteria. Most migration models either do not handle multiple criteria and locations or lack micro foundation. The model predicts that migration flows will be out of all but the top two ranked regions. The empirical work, which uses 1990–1999 Guangdong annual data, confirms this proposition and finds a high degree of common marginal effects of the criteria among 18 locations but also finds increasing regional inequalities. JEL: F22 J61 O15