Business Regulations and Between-City Migration

Abstract

Local governments compete for new residents by creating institutional frameworks that are attractive to such residents. As 13 percent of the US moves each year, policies that affect the ease of doing business may attract thousands of entrepreneurial and working households. We use city-level aggregated migration data from the American Community Survey and Internal Revenue Service to analyze changes in net migration between cities that differ in the ease of starting a business, employing workers, getting electricity, registering property, and paying taxes. Expansions in the flexibility of regulatory processes that affect workers multiple times, such as ease of employing workers or filing taxes, have large effects in encouraging in-migration. In contrast, improvements in policies that only affect new workers or business owners temporarily, such as ease of installing utilities or registering property, do not have a noticeable effect on migration patterns.