The effect of redistribution on migration: Evidence from the Israeli kibbutz

This paper tests a key theoretical prediction of public finance, that local redistribution induces sorting of the population so that less productive individuals are located in communities with more redistribution. Specifically, I use a longitudinal data set to test whether and to what extent the intensive redistribution practiced by Israeli kibbutzim encourages exit of more productive individuals and entry of less productive ones. The findings support the theoretical prediction. Kibbutz-leavers are more skilled than both stayers and other rural migrants and they earn higher wages upon exit than observably similar city natives and other migrants. In contrast, individuals who earn lower wages in the city are more likely to enter a kibbutz, but they are not more likely to move to other rural areas. These findings also support Borjas' hypothesis that migrants' self-selection depends on the difference in returns to skills between the origin and the destination.