Migration is a multidimensional phenomenon requiring an interdisciplinary approach. This thesis studies some economic aspects of the internal migration of labour. A model of migration as investment in human capital is applied throughout the thesis to study economic causes and consequences of internal migration on a micro level. Various predictions from the theory are verified on longitudinal micro data from the Household Income and Labour Dynamics in Australia (HILDA) survey. The thesis is composed of three essays:
(1) Causes of migration, the individual level push and pull factors facilitating or hampering mobility and representing both costs and benefits to migration, are studied in Chapter 2. A binary dependent variable model for the likelihood of an individual migration decision is estimated on panel data from the HILDA survey by means of the probit model with individual random effects. The main results are that those not in the labour force, similarly to the unemployed, are more mobile than the employed; and that higher individual wages and greater remoteness from larger urban centres also increase the likelihood of migration.
(2) Chapter 3 studies wage returns to internal migration. Evidence is sought for the theoretical predictions of the traditional human capital model of investment in migration about a positive wage premium: positive returns to migration distance and human capital. Using individual-level data from the HILDA Survey and applying a system GMM to a dynamic panel earnings model, it is found that in the short-run there are returns to distance which increase with the level of education and decline with the level of pre-migration wage. The conclusion is that internal migration in Australia is a good strategy only for better educated and lower income individuals.
(3) Several theoretical models of migration destination search are presented in Chapter 4. It discusses two models of migration as an outcome of the fixed-sample-size search and the sequential search. A model with endogenous investment in search activity demonstrates that lower initial utility increases chances to participate in search and that the likelihood of migration depends on budget constraints: those of the poor who can afford to buy relatively more information are expected to gain more than others.