Economics and Business Economics Seminar (ECO): Frederik Almar, Aarhus University

Abstract:

Why do young adults increasingly migrate from rural to urban areas? In this paper, I first use Danish administrative data to empirically identify three main explanations for why young adults are drawn toward cities: 1) to pursue a university education, 2) to work in high-paying firms, and 3) to participate in the attractive city marriage market. These mobility patterns result in a spatial income gap and differ by socio-economic background creating a link between spatial- and social mobility. Second, I derive and estimate a novel theoretical structural model encompassing all three explanations to understand their contributions and interdependence. The model features three life-cycle stages in which agents make decisions about education, location of residence, whom and when to marry, labor supply, and consumption of private and public goods. The paper's key contribution is a micro-founded matching model with two-sided heterogeneity in multiple disjoint markets in multiple stages allowing for endogenous selection into markets.