The demise of California reconsidered: interstate migration over the economic cycle

Recent years have witnessed widespread media attention and policy debate regarding the causes and consequences of population flight from California. While some analysts' reports link the reversal in California migration flows to cyclical swings in the state economy, other commentaries focus on alleged deterioration in California amenities and quality of life. This paper employs a logistic migration model to evaluate the role of economic and other location-specific effects in the determination of California domestic migration flows. The model is estimated using data for each of the 50 U.S. states for the 1981-1992 period. Various simulations of the model for the California case are then undertaken to indicate the effect of evolution in economic conditions and other location-specific effects on California net migration. A baseline simulation predicated on a reversion in the state's unemployment rate, wage, and house price differentials to average levels observed in the 1981-1992 period suggests a substantial slowing in California out-migration. Further, deterioration in California location-specific fixed effects, as estimated from the otherwise unexplained portion of the acceleration of out-migration in the more recent 1989-1992 period, serves to dampen the simulated improvement in California net migration only modestly. Overall, our research findings suggest that a large part of the unprecedented and sizable domestic out-migration from California is temporary, to be largely reversed in the context of a rebound in the California economy.