The Effect of Regional Income and Educational Differentials on Migration and Regional Convergence

Abstract

In this paper we explore how interregional migration effects regional convergence, based on the costs and benefits of migration. Migrants can choose whether they get higher education for the future higher income or directly supply their labor to the market. Mongolian economic data is used for the calibration to show the numerical implications for convergence speeds. The model predicts that migration has a direct effect on population convergence. The choice of study and the level of education tend to accelerate convergence speed, but the convergence speed is inversely related to the years of schooling. This paper also investigates empirically the convergence of GDP per capita across Mongolia's twenty-two aimags. Empirical results imply that if we convergence equations, the estimated include the net migration rate in the coefficient shows that the GDP per capita converges more rapidly to the steady state position. This means that migration speeds up convergence as predicted in theoretical model.