WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

We estimate the effect of regional income inequality on emigration rates of Austrian municipalities using a unique data set that is constructed based on individual level data from Austrian administrative registers. The register-based data contain information on the municipality of residence of all individuals aged 16 and over that have their main residency in Austria, as well as their income and socio-demographic characteristics. Aggregating this information to the municipality level allows us to assess the role of relative deprivation – a measure of relative income – on top of absolute income in shaping internal migration in Austria. We find that increases in relative deprivation in a municipality lead to higher emigration from the municipality. Allowing for heterogeneous effects across income, education, and age groups reveals that the effect is stronger among those with comparably low levels of income, and among low-skilled and young individuals.