I noticed an fascinating tweet by Joe Weisenthal, discussing the query of what determines interstate migration:
That is the traditional rooster and the egg drawback—which comes first?
I view this query for instance of the fallacy of composition—what’s true for the person just isn’t 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 your complete story. Jobs are additionally transferring to particular states, principally within the sunbelt. And that migration is at the very least partly pushed by the prepared availability of labor fleeing areas with excessive housing prices, comparable to California.
And housing just isn’t the one issue. Illinois can also be dropping residents, regardless of housing prices in that state being fairly cheap. 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 result of its decrease taxes and housing prices. In that case, a agency could resolve to find a brand new headquarters within the Lone Star State, even earlier than a single new worker has been employed. From the angle 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 giant influx of staff into states like Texas, motivated by low housing prices and taxes.
On the combination stage, it in all probability makes extra sense to assume when it comes to employers following the employees—transferring to the place there’s a giant pool of staff prepared to take jobs at an inexpensive wage. However on the particular person stage it’s usually 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 example, buyers usually like to go to an space that has a half dozen automobile sellers in shut proximity, in order that they will examine a number of totally different fashions. Automotive sellers prefer to find their dealership subsequent to different sellers, as a result of they know these areas have loads of buyers for brand spanking new vehicles.
Are the sellers drawing the patrons? Or are the patrons drawing the sellers? In equilibrium, the reply is “each”.