What Happened to Migration in 2014?
IRS Statistics of Income Edition
Earlier this month, I covered the new 2014 ACS data. And last month, I talked about the IRS’ methodology change for its new migration data series. Today, the IRS released new 2013–2014 numbers. This is pretty exciting.
The new IRS data tells a story of falling migration, especially for the youngest and oldest tax filers, and for the richest and the poorest. For comparison, Current Population Survey (CPS) showed a very slight decline in migration. The American Community Survey (ACS)showed essentially flat migration. The new IRS data is telling a different story than other data sources.
Migration in 2014
Comparing the Sources
As you can see, the period with the new IRS methodology sees a sharp rise in IRS-measured migration that is, at best, only partly confirmed in other sources. The IRS data does seem to have a reasonably good correlation with recent CPS data, but not ACS data, which is odd, because historically IRS and ACS have been extremely similar to one another.
In 2014, the IRS-measured interstate migration rate fell from 2.6% to 2.5%. This is not a “sample” but is rather an actual sum, so it does reflect a pretty reliable number. However, this IRS rate is the migration of tax exemptions divided by the total number of tax exemptions. For reference, those numbers are 6.35 million and 255.4 million. The American community survey suggests population was actually about 316 million. In other words, the IRS is missing 60 million people. These people are likely to be unemployed, children, foreigners, undocumented immigrants, or low income. In other words, people who may be somewhat more likely to migrate. So we should keep in mind that IRS migration may be slightly understating total mobility.
But the new IRS data gives us more than just aggregate numbers. It gives us age and income breakouts.
Migration in 2014
Migration Fell for All Ages
Migration in 2014 fell for all ages. However, it fell the most for the young and the old. In relative terms, the steepest decline was for those over 65, while the smallest decline was for those under 26. Now, all that said, there’s no cause for panic. Migration in 2014 is about equivalent to migration in 2012. So we’re not talking about some cataclysmic shift here. Just a hop down from last year’s unusual spike.
Migration in 2014
Migration Fell for All Income Levels
Every income level saw falling migration as well. The steepest declines were for the rich and the poor. For those earning under $10,000, migration fell well below the levels in the last 2 years. For those earning $200,000 or more, migration fell to about 2012 levels. For those earning $50,000 to $200,000, migration remains above 2012 levels, despite this year’s decline. In other words, there is less variation in migration by income in 2014 than in 2012 or 2013.
Migration in 2014
Migration Fell for Literally Everyone
The above chart shows the change in gross migration for each age-income pair. So the first column shows that the gross migration rate for under 26-year-olds earning under $10,000 fell by 0.26 percentage points. The dark purple bar way out on the right side of the chart shows that the gross migration rate for retirees earning $10,000 to $25,000 fell by 0.34 percentage points.
There are some interesting trends here. Middle-aged, middle-income migration fell the least, while rich and poor early-career, and poor retirees, fell the most. And the trend here is interesting. For retirees, the change in migration is fairly clear: the richer they get, the less they decline. For young people, there’s a familiar U-shape: rich and poor both decline. For the youngest filers, aside from the under $10k crowd, the migration decline seems to rise with income.
I’m not venturing an explanation here for these changes. But it’s notable that there are fairly significant differences for each group.
Now, that chart showed the raw percentage point decline for each group. We can also look at that decline relative to their 2013 gross migration rate.
Migration in 2014
Migration Fell Most for Middle-Aged and Retirees
The above chart shows the decline in migration for each age-income group as a share of their 2013 gross migration rate. So migration fell for $10k-$25k earning retirees by about 19 percent, while it fell for $10k-$25k earning under-26-year-olds by just 2 percent. Once again, for young and middle-age groups, migration falls most for the more well-to-do. But the older you go, the more the decline among the lower-income begins to outweigh the rich. This is a really interesting change pattern for which I have no particular explanation. Apparently between 2013 and 2014, high-earning younger people decided moving was less appealing, while for older folks, it was low-earners who stayed in place more.
Migration in 2014
Conclusion
IRS-measured migration fell substantially in 2014. This fall is hard to put in a historical context because the IRS has changed its migration methodology. Declining migration impacted every age group, every income group, and ever age-income combined group. This suggests the declining migration either stemmed from numerous particular factors, or else some very broad-based change: no one specific factor can explain the shift. Migration generally fell most for older tax filers, especially on a relative basis. This suggests that “retiree migration,” and associated claims relating to weather-motivated migration, was less significant in 2014 than in 2013. The effect of income on migration rate changes varied with age, suggesting a heterogenous effect of income on migration across the life cycle. This is no big surprise. Income is widely understood to have heterogenous effects on migration in other contexts, it is plausible it may also across age groups for domestic migration.
See my last post, on the future of U.S. immigration.
Start my series on migration from the beginning.
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I’m a graduate of the George Washington University’s Elliott School with an MA in International Trade and Investment Policy, and an economist at USDA’s Foreign Agricultural Service. I like to learn about migration, the cotton industry, airplanes, trade policy, space, Africa, and faith.
My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research. More’s the pity.
