A Dynamic Interregional Theory of Migration and Population Growth

An attempt is made to integrate the theory of amenity value determination in regions as developed by Rosen (1979) and Roback (1982, 1988) and the theoretical framework on migration. Since the mode of analysis of the amenity valuation models is comparative statics, they cannot fully describe migration, which is fundamentally a disequilibrium phenomenon. Similarly, by not couching amenities in a theoretical framework, the migration literature ignores the effect of population movements on amenities. These 2 strands of thought are brought together in a cohesive theoretical model. Assuming that migration is the only source of population growth, a region's equilibrium population declines either due to the downward shift of its own real full income net of cost (RFI) curve or an upward shift in others' RFI curves. The model explicitly shows that only in equilibrium is the amenity value differential reflected in earnings differentials and housing price differentials.