Information is critical for migration decisions. Yet, depending on where individuals reside and who they interact with, they may face different costs of accessing information about employment opportunities. How does this imperfect and heterogeneous information structure affect the spatial allocation of economic activity and welfare? To address this question, I develop a quantitative dynamic model of migration with costly information acquisition and local information sharing. Rationally inattentive agents optimally acquire more information about nearby locations and learn about payoffs in other locations from the migrants around them. I apply this model to internal migration in Brazil and estimate it using migration flows between regions. To illustrate its quantitative implications, I evaluate the counterfactual effects of the roll-out of broadband internet in Brazil. By allowing workers to make better mobility choices, expanding internet access increases average welfare by 1.6%, reduces migration flows by 1.2%, reduces the cross-sectional dispersion in earnings by 4%.
We examine whether workers' limited migration responses to local shocks are due to lack of information about the potential gains from regional migration. We analyze the mobility decisions of all formally employed workers in Brazil over 15 years. We derive model-based moment conditions to test for the content of migrants' information sets. First, we find that individuals located in regions with a better access to internet and a higher population density have richer information sets overall. Second, information is concentrated on few neighboring regions and on regions with population sharing similar education and racial composition. Third, individuals identifying as white and with a higher educational attainment feature richer information sets.
Both large establishments and large cities are known to offer workers an earnings premium. In this paper, we show that these two premia are closely linked by documenting a new fact: when workers move to a large city, they also move to larger establishments. We then ask how much of the city-size earnings premium can be attributed to transitions to larger and better-paying establishments. Using administrative data from Spain, we find that 38 percent of the city-size earnings premium can be explained by establishment-size composition. Most of the gains from the transition to larger establishments realize in the short-term upon moving to the large city. Establishment size explains 29 percent of the short-term gains, but only 5 percent of the medium-term gains that accrue as workers gain experience in the large city. The small contribution to the medium-term gains is due to two facts: first, within large cities workers transition to large establishments only slightly faster than in smaller cities; second, the relationship between earnings and establishment size is weaker in large cities.