TITLE: Moving Across Borders: The Determinants of Interstate Business Relocation

AUTHOR: Jed Kolko

PAGES: 8     DATE: September 2010

ABSTRACT: The movement of businesses from one state to another sparks concern about state business climates. However, previous PPIC work has demonstrated that interstate business relocation is rare. This short piece documents the considerable variation in business relocation rates among states and tests several explanations for this variation, finding that the same states tend to exhibit higher rates of relocation both into and out of the state. Relocation accounts for higher shares of gross employment changes in states where more economic activity is located near the state border. Net employment change has only a modest relationship with in-migration rates and no significant relationship with out-migration rates, confirming that jobs leaving a state are not a bellwether of poor state economic performance.

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