ESTIMATING INTERREGIONAL UTILITY DIFFERENTIALS

The major objective of this paper is to estimate regional utility levels based on interregional migration data. We first revealed three stylized facts concerning migration behavior by examining long-term Japanese data on interregional migration. We then uncovered inconsistency between net migration and utility differential in the presence of distance-related migration costs. Based on the stylized facts and the inconsistency problem, we formulated an operational model and estimated interregional utility differentials. We showed that the interregional utility differentials converged until the late 1970s. We also showed that the utility estimates are highly correlated with the per capita real income. We also applied the model to interregional migration data in the United States and Canada and confirmed the model's validity.