Gravity models of interprovincial migration flows in Canada with hierarchical multifactor structure
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Gravity models of interprovincial migration flows in Canada with hierarchical multifactor structure Laura Serlenga1 · Yongcheol Shin2 Received: 6 February 2020 / Accepted: 3 September 2020 © The Author(s) 2020
Abstract Following recent contributions on migration flows, we contribute to the literature by relaxing restrictions on how multilateral resistance to migration (MRM) may affect province-pair-specific migration flows. We follow recent advancements in the threedimensional (3D) panel data models with a hierarchical multifactor structure and develop the more flexible specification for MRM. In addition to including unobserved global (country) factors with province-pair-specific coefficients, we can control for local origin (destination)-specific factors that have heterogeneous effects on destinations (origins). We apply the 3DCCE estimator advanced by Kapetanios et al. (J Econom, 2020) to an analysis of the determinants of interprovincial migration flows in Canada from 1976 to 2014. In particular, we find that the recent rise in the internal migration flows, registered in Canada from 2009 onwards, is more likely to be associated with the relative income inequality and network presence rather than the conventional long-run determinants such as income and unemployment differentials. Keywords Multilateral resistance to migration cross section dependence · Multi-dimensional panel data models · Unobserved global and local factors · Interprovincial migration JEL Classification C13 · C33 · F14 · F45
We are mostly grateful for the insightful comments by the editor and two anonymous referees for the Special Issue in honour of Badi Baltagi as well as George Kapetanios, Camilla Mastromarco and Chaowen Zheng. The usual disclaimer applies.
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Yongcheol Shin [email protected] Laura Serlenga [email protected]; [email protected]
1
University of Bari, Bari, Italy
2
University of York, York, UK
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L. Serlenga, Y. Shin
1 Introduction A growing number of studies have analysed the importance of controlling cross section dependence (CSD, hereafter) in gravity model of migration flows. In particular, following the seminal study by Anderson and van Wincoop (2003), Bertoli and Fernández-Huertas Moraga (2013) defined multilateral resistance to migration (MRM, hereafter) as the influence that alternative destinations exert on the bilateral migration flows and developed a theoretical framework for the gravity equation through a random utility maximisation (RUM) model and showed that MRM can be controlled by a multifactor error structure. They applied the common correlated effects (CCE) methodology advanced by Pesaran (2006) to analysing international migration flows from 61 origin countries to Spain. The importance of properly taking into account MRM has been emphasised in a recent survey by Beine et al. (2016) such that the regression residuals should be cross-sectionally independent for the estimation to be consistent with the RUM model. In the literature on gravity models, a number of studies have also highlig
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