The Income Returns of Moving for Work: Does Distance Matter?

Abstract

The positive link between work-related moves and income is well-established, but little robust evidence exists on whether the distance moved matters in this relationship. There are, however, theoretical arguments on why distance should shape the economic rewards from moving for work. To address this research gap, we draw on longitudinal data from the German Socio-Economic Panel (SOEP, N?=?154,236 person-years). We employ fixed effects panel regressions to estimate the impact of moving for work-related reasons (N?=?1186 movers) on gross monthly income, with moving distance and gender as moderators. The results show that the economic returns from moving for work increase with distance. When using a categorical specification of the distance variable, we find that the largest differences in returns are between individuals who move over distances shorter and longer than 200?km. Furthermore, although women have lower overall income gains than men when moving for work, the additional effects of moving longer distances on incomes are similar. In sum, our findings suggest that moving distance does shape the income returns and that the rewards to moving longer distances are higher.