Labor Migration and the Cost of Living

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Abstract
The determinants of interregional and international migration is a topic which has received considerable attention from economists. Most studies of migration determinants investigate the impact of variables such as income (wage rate) levels, unemployment rates, and distance on the migration decision. One variable which has generally not been explicitly investigated in these studies is the cost of living. Logically, it seems that migration decisions, in order to be rational, must involve cost-of-living considerations if the net benefits of migration are to be appraised meaningfully. Alternatively stated, failure to take interregional (intemational) living cost differentials into consideration when making a migration decision is tantamount to “money illusion”. In view of this, the purpose of this paper is to investigate explicitly the impact of cost-of-living considerations on the migration of labor.

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