I noticed an fascinating tweet by Joe Weisenthal, discussing the query of what determines interstate migration:
That is the basic hen and the egg downside—which comes first?
I view this query for example of the fallacy of composition—what’s true for the person is just not all the time true for the group. I believe that Weisenthal is right that when particular folks transfer they’re motivated by the provision of jobs. Nevertheless, that’s not the complete story. Jobs are additionally transferring to particular states, principally within the sunbelt. And that migration is a minimum of partly pushed by the prepared availability of labor fleeing areas with excessive housing prices, comparable to California.
And housing is just not the one issue. Illinois can also be dropping residents, regardless of housing prices in that state being fairly affordable. Taxes and rules are additionally extra business-friendly in states like Texas.
When a agency considers the place to find a enterprise, the provision of expert labor is a vital consideration. Suppose {that a} agency is ready to pay decrease wages in Texas as a consequence of its decrease taxes and housing prices. In that case, a agency might resolve to find a brand new headquarters within the Lone Star State, even earlier than a single new worker has been employed. From the attitude of the person employee, they see their transfer as motivated by job availability. However the jobs can be found exactly as a result of employers know that there’s a massive influx of employees into states like Texas, motivated by low housing prices and taxes.
On the combination degree, it in all probability makes extra sense to suppose when it comes to employers following the employees—transferring to the place there’s a massive pool of employees keen to take jobs at an affordable wage. However on the particular person degree it’s typically he case that the employee is following the employer, transferring to the place the roles are.
As is usually the case in economics, it’s an equilibrium phenomenon. As an illustration, buyers typically like to go to an space that has a half dozen automotive sellers in shut proximity, in order that they will evaluate a number of totally different fashions. Automobile sellers prefer to find their dealership subsequent to different sellers, as a result of they know these areas have loads of buyers for brand new automobiles.
Are the sellers drawing the patrons? Or are the patrons drawing the sellers? In equilibrium, the reply is “both”.
