Student Faculty Macro Lunch: "Spatial Hysterisis"

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Submitted by Brandon Eltiste on February 02, 2023
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597 Evans Hall
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Tuesday, February 7, 2023 - 12:00
About this Event

Michael Amior, Assistant Professor, Hebrew University of Jerusalem

Abstract: We devise a tractable model of persistent heterogeneity in mobility costs. The model admits analytical solutions for household values, migration flows, and the distribution of mobility types across space, a fundamental challenge posed by the environment. Central to tractability is that equilibrium mobility is ordered: locations facing adverse (favorable) shocks shrink (grow) via population flows in order of mobility type, starting with the most mobile. Spatial gaps emerge not only in labor market outcomes, but also in the composition of mobility types. Spatial convergence involves closing both gaps, and generically takes longer. Labor market outcomes display endogenous history dependence whereby locations with greater shares of mobile types exhibit greater resilience to adverse shocks. Auspicious locations are heterogeneous and dynamic, featuring high population churn, while inauspicious locations become increasingly homogeneous and sclerotic. Extending the model to map mobility types to observable skill groups, and confronting it with data on population flows back to the 1960s, we find support for the predictions of the model.