Boston College Economics Professor Pablo Guerr贸n-Quintana presented his paper On Regional Borrowing, Default and Migration last Friday 18th May at the 7th NCID Research Workhsop at the Fundaci贸n Ram贸n Areces in Madrid. The paper explores default at a municipal level in the U.S. and explores how migration between cities affects it.
As people migrate some central planners of cities issue more debt than optimal taking into account that migration will continue and it will be paid by those who come to the city in the following years. 鈥淭his has led some cities to experience financial difficulties such as Detroit and Chicago鈥, he said.
Finally Guerr贸n-Quintana finds that migration is an important asset of the GDP, as suppressing internal migration between U.S. cities would drop the GDP in 15%. 鈥淭he moment that people cannot migrate, they get trapped with low productivity, don鈥檛 get a high wage although they have skills, they are underpaid, their income is low and GDP will be low in the country鈥, he finalized.