Place-Based Policies and Migration: Evidence from India

Abstract Place-based policies may increase migration into eligible areas and, hence, affect their intended aim of reducing economic disparities. Using a regression discontinuity design that exploits an Indian place-based tax-exemption policy, this paper finds that there was an increase in migration for job-related reasons, mainly driven by job transfers. While firm entry and hiring increased in the treated districts, overall employment probability and wages did not change for the average initial resident, although there is some evidence of sectoral shifts in employment. Furthermore, the cost of housing increased in the treated districts. These results provide empirical evidence for the implications of labor mobility for place-based policies.