I noticed an fascinating tweet by Joe Weisenthal, discussing the query of what determines interstate migration:
That is the traditional hen and the egg downside—which comes first?
I view this query for instance of the fallacy of composition—what’s true for the person just isn’t at all times true for the group. I think that Weisenthal is right that when particular folks transfer they’re motivated by the supply of jobs. Nevertheless, that’s not the whole story. Jobs are additionally shifting to particular states, principally within the sunbelt. And that migration is at the least partly pushed by the prepared availability of labor fleeing areas with excessive housing prices, reminiscent of California.
And housing just isn’t the one issue. Illinois can also be shedding residents, regardless of housing prices in that state being fairly affordable. Taxes and laws are additionally extra business-friendly in states like Texas.
When a agency considers the place to find a enterprise, the supply of expert labor is a vital consideration. Suppose {that a} agency is ready to pay decrease wages in Texas on account 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 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 giant influx of employees into states like Texas, motivated by low housing prices and taxes.
On the combination degree, it most likely makes extra sense to assume when it comes to employers following the employees—shifting to the place there’s a giant pool of employees keen to take jobs at an affordable wage. However on the particular person degree it’s usually he case that the employee is following the employer, shifting to the place the roles are.
As is commonly the case in economics, it’s an equilibrium phenomenon. As an illustration, buyers usually like to go to an space that has a half dozen automotive sellers in shut proximity, in order that they’ll evaluate a number of completely different fashions. Automotive sellers wish 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”.
