CEU Economic Seminar Series: Understanding Migration Responses to Local Shocks

Coauthored with Kirill Borusyak and Rafael Dix-Carneiro

Short outline:

In this paper, we investigate regressions commonly used to assess the effects of local economic shocks on local populations.  Using a simple model with frictional mobility, we find that these regressions are severely misspecified, particularly when migrant-connected regions face similar shocks.  We propose a model-consistent empirical approach and present simulation evidence using real-world geography and migration patterns to show that the standard approach is likely to yield substantially biased results in practice.

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