Place-based policies and migration
SpeakerAma Baafra Abeberese, Wellesley College
Date & Time
LocationThis is a Virtual Event.
Seminar is open to U-M students and faculty.
Abstract: Place-based policies are increasingly being used to reduce geographic economic disparities. Such policies, however, have the potential to increase migration into the eligible districts and, hence, affect the intended aim of the policies. This paper examines the potential for migration to respond to place-based policies. We analyze the effect of a place-based tax policy in India that provided tax exemptions for newly-created firms in eligible districts. Using a regression discontinuity design that exploits the policy design, we find that there was an increase in migration into treated districts for job-related reasons. We also find that while firm entry and hiring increased in treated districts overall, wages did not increase for the initial residents of the treated districts, but increased for migrants. Further, the cost of housing increased in the treated districts. Our results, therefore, provide some insight into the unintended consequences of place-based policies and highlight the need to consider migration effects when designing these policies.
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