Saturday, January 13, 2018

A Note on Interstate Migration

A short note on a sunny Saturday.

On January 2 I published an article reporting Census data on interstate migration. I got a couple of questions based on that article where readers pointed out that California, despite a negative interstate migration balance, still had a growing population. It was not until later that I realized that those who asked about this actually believed that California's population was determined entirely by interstate migration. 

That's fine. Public policy is for everyone, regardless of intellectual prowess.
Just to be clear: the population of a jurisdiction - a state is an example of a jurisdiction - changes because of a) migration to and from other jurisdictions - other states - within the same country, b) the net between births and deaths, and c) migration to and from other countries. 

Put simply: if California loses population to other states, it makes up for that loss in the form of immigration from other countries, and a positive birth-death balance. 

With that clarified, I wanted to follow up on previously analyzed migration data. The Internal Revenue Service does a good job of keeping track of where taxpayers move - perhaps too good of a job... they can tell where people move down to the county level. In fact, their data is so detailed that the IRS has to adjust it to prevent the identification of individual taxpayers.

As with all databases, there happens to be a public policy upside to it. In our case, that upside is the ability to understand detailed migration patterns that can be economically motivated. The particularly important economic variable is the migration of income and wealth. We are going to take a closer look at these numbers in the coming week; for now, let us take a look at the latest data, reporting migration of tax returns and adjusted gross income from 2015 to 2016.

In total, Wyoming lost 13,203 tax returns while gaining 11,283. Of the outbound returns, 13,038 went to other states, with the rest going overseas. On the inbound side, 11,103 were domestic.

Interestingly, income-wise these returns netted a flow in the opposite direction: outbound tax returns took with them $723.8 million, while inbound returns brought in $831.2 million worth of income. In other words, the average inbound migrant earned $73,668, a full 34 percent more than the outbound migrant. 

These numbers are verified by a closer look at the per-state numbers for per-return income. Here are the top five states for inbound and outbound migration, ranked by per-return income:

Inbound Outbound
Connecticut 401,143 West Virginia 234,861
New York 328,863 Massachusetts 81,947
Illinois 249,526 California 78,520
New Jersey 234,580 Kentucky 75,306
Maryland 115,165 North Dakota 69,017

In other words, the average taxpayer moving to Wyoming brought more money with him than left the state with the average outbound taxpayer.

If we calculate the net migration - subtracting outbound from inbound - we get the following numbers for the 48 other states for which there is data (no numbers for Rhode Island or District of Columbia). For example, there were 33 more taxpayers moving to Wyoming from New York than in the opposite direction; they brought with them $42.6 million more than went from Wyoming to New York. The states are sorted by income migration:

Net migration of tax returns and income
Returns Income
New York 33 42,613,000
Illinois 56 41,195,000
California 214 40,246,000
Connecticut 8 15,054,000
Colorado -397 12,810,000
New Jersey 14 10,268,000
Overseas net migration 15 9,449,000
Maryland 38 7,752,000
Virginia 5 6,933,000
Washington -153 6,157,000
North Carolina 18 4,321,000
Pennsylvania 29 3,827,000
Massachusetts 13 2,617,000
Indiana 19 2,530,000
South Carolina -41 1,109,000
North Dakota 30 1,039,000
Nebraska -19 799,000
Vermont -2 720,000
Alaska 13 565,000
Hawaii -2 450,000
Tennessee -12 445,000
Iowa -9 381,000
New Hampshire -3 -115,000
Delaware -2 -117,000
Wisconsin -12 -209,000
Alabama -7 -217,000
Kansas -21 -353,000
Maine -6 -377,000
Mississippi -2 -556,000
Ohio -8 -835,000
Texas -150 -1,067,000
Louisiana -19 -1,408,000
Oklahoma -35 -1,697,000
Kentucky -12 -1,810,000
Arkansas -42 -1,820,000
Michigan -80 -1,911,000
Minnesota -42 -1,961,000
Georgia -20 -2,381,000
Missouri -18 -3,077,000
New Mexico -62 -4,249,000
Nevada -66 -5,137,000
Utah -137 -5,294,000
West Virginia -2 -6,651,000
Oregon -123 -7,492,000
South Dakota -138 -8,188,000
Idaho -215 -8,647,000
Florida -138 -10,034,000
Montana -166 -10,786,000
Arizona -264 -17,516,000

We will look more closely at these numbers next week. For now, let us close with noting that there is more consistency in the outbound migration than in the inbound: there are more states for which the migration net is negative for both the number of returns and for income, than for which the opposite is true. 

In short: our outbound migration trend is more consistent than the inbound trend. It also appears to consist of middle-class families - and thereby workforce - packing up and leaving, while the numbers suggest that inbound migration is motivated by taxes.

That's all for now. Thanks and have a great weekend!

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