Economic Freedom,Migration, and Income Change in the United States: 1995 to 2010

Migration is primarily motivated by economic reasons, but people also move for a variety of other purposes, including a desire for political and economic freedom. Although freedoms are often thought of as dominant reasons for international migration in political states with federal systems of governments, migration across internal political borders also takes place to take advantage of local differences in political and economic regulations, taxes, and public goods. Using the combined Internal Revenue Service/Census Bureau state-to-state migration data for 1995 to 2010, we examine the relationship between economic freedom and migration and its impact on state-level income change. We find that economic freedom is positively associated with income change due to net migration but not associated with gains or losses from income differences between in- and outmigrants. In general, states with higher or lower levels of economic freedom gained or lost income due to migration.