Sheffield Economic Research Paper Series

1. INTRODUCTION

Predictions of substantial increases in UK population over the next decade are largely 

based upon the expectation of an immigration explosion. For the purpose of regional planning 

for social and economic provisions, it is important to understand the nature of international 

migration as well as inter-regional migration within the UK. Inter-regional migration differs 

from international migration in one important aspect. In the case of international migration 

from the poorer to the richer countries, the flow is mostly unidirectional. On the other hand, 

inter-regional migration within a country is usually a two-way flow. Frequently, in the case 

of international migration from a poor country to a rich country, the difference in wages is so 

high that immigrants often do not mind accepting a lower-status job, for which their skills are 

irrelevant. In contrast, inter-regional migration is largely based on the exchange of skills. It 

bears some similarity with intra-industry trade (Brander, 1981), where different brands of the 

same commodity (e.g., cars or TV sets) are traded between two countries. Diversity of skills 

increases productivity. However, the distribution of skills relative to their demand in 

different regions within the same country may be different. This is an important factor in 

inter-regional migration. It was pointed out in Borjas (1987), that skills have observable as 

well as unobservable components. It is quite possible that a highly skilled worker‟s 

unobservable skills are more effective in the country of origin than in the country of 

destination. In such cases, workers may not migrate. On the other hand, a low-skilled 

worker‟s unobservable skills may be more effective in the country of destination than in the 

country of origin. In such cases, workers may migrate. Borjas argued that, because of this 

asymmetric realisation of unobservable skills, it is not correct to assume that only highskilled workers migrate. Each worker has to decide whether to migrate or not. In the 

literature, this is known as the self-selection model of immigration. In the case of intraregional migration, this self-selection plays an important role.