Sep 29 JDN 2458757

The United States is an exceptional country in many ways, some good (highest income), some bad (highest incarceration rate), and some mixed (largest military). But as you compare the US to other countries, one thing that will immediately strike you is how we are a nation of migrants.

I don’t just mean immigrants, people who moved to the country after being born here—though we certainly are also a country of immigrants. About 99% of the US population descends from immigrants, mostly European—there aren’t a lot of countries that can even say the majority of their population migrated from another continent. Over 45 million Americans are foreign-born, which is not only the highest in the world; it is almost one-fifth of all the immigrants in the world. We experience a net inflow of immigrants averaging over 1 million people per year, by far the highest in the world. Almost half of the increase in our workforce over the last decade was due to immigrants.

But the US is full of migration in another way, which may in fact be even more important: Internal migration, from country to city, from one city to another, or from one state to another. Every year, about 12.5% of Americans move somewhere; about 10% move to a different state. No other country even comes close to this level of internal migration. According to the US census, about two-thirds of moves are within the same county, and yet each year there are ten times as many Americans who moved to a different county as there are immigrants to the United States. There are more cross-state migrants to California and Texas alone than there are immigrants to the entire country. There are about as many people who move each year within the United States as there are foreign-born individuals total.

This internal migration is central to the high productivity of the American economy. Internal migration is central to the process of urbanization, which drives a great deal of economic development. It is not a coincidence that the United States is one of the world’s most urbanized countries as well as one of the richest, nor that the ranking of US states by urbanization and the ranking of US states by per-capita income look very much alike.

On average, increasing a state’s urbanization by 1 percentage point increases its average per-capita income by $270 per year (in chained 2009 dollars); since most of that increase is going to the people who actually moved, this means that the average income increase as a result of moving from the country to the city is likely over $20,000 per year. To put it another way, if Maine could become as urbanized as California, we would expect its per-capita income to increase from about $39,000 per year to about $54,000 per year—which is just about California’s per-capita income.

Indeed, migration is probably the one thing holding up our otherwise dismal level of income mobility, which still trails behind most other First World countries (and far behind Denmark and Norway, because #ScandinaviaIsBetter). Canada also does extremely well in terms of income mobility, and Canada also has a high rate of internal migration, with almost 1% of Canadians moving to a new province in any given year. Canada is probably what the US would look like with a European-style social safety net; our high internal migration rate might actually get us better income mobility than is currently achieved by say France or Germany.

Indeed, migration may be the main reason there is still some vestige of an American Dream. It’s not what it used to be, but it isn’t yet dead either. Two-thirds of American adults have more real (inflation-adjusted) income than their parents. Intergenerational income mobility in the US grew quickly in the 1940s and 1950s, grew more slowly in the 1960s and 1970s, and has been stagnant ever since. While the odds of moving to a different income bracket have remained stable, income inequality has increased over the last 40 years, which means that the differences between those brackets have become larger.