Where is the grass greener? A micro-founded model of migration with application for Guandong

This paper first develops a structural micro-founded model of aggregate net migration flow to study how migrants choose between multiple locations using multiple criteria. Migration should reduce observed inequality in the criteria. Apart from Bazzi (2012) who develops a micro-founded model of aggregate migration flows (but with a single destination and reason for migrating) to study the barriers to international migration flows, existing theoretical frameworks either cannot handle multiple criteria and locations or lack micro foundation. The model predicts that migration flows will be out of all but the top two ranked regions, most moves will be moving into the top ranked location, but low utility individuals in the best location will move to the second ranked location. The empirical work, which uses 1990-1999 Guangdong annual data and applies this structural model with generalized least squares and weighted least squares, confirms our prediction and finds a high degree of common marginal effects of the criteria among 18 locations but also finds increasing regional inequalities.