Understanding Gross Worker Flows Across U.S. States

A dynamic general equilibrium model of migration is developed to explain the main features of geographic mobility of workers across U.S. states. Models of net flows only cannot explain the positive cross-sectional correlation between gross inflow and outflow rates. The dynamics of migration flows is driven by local productivity shocks and idiosyncratic shocks to the match between a worker and a location. The latter is revealed only after migration has occurred. Thus, migrating workers have a higher propensity to migrate again than incumbent workers and locations that attract high numbers of migrants also tend to experience high outflow rates.