Assessing the Effect of the Consumer-Voter Sentiment on Tiebout-Like Migration: The EU 27 Case

Abstract

The paper revisits the determinants of intra-European migration using a conditional logit model for the period 2000–2010. With all moving restrictions lifted, a substantial Union enlargement in 2004, and a severe economic crisis in progress, new evidence is being revealed regarding the decision making process of individuals who choose to relocate. We examine Tiebout’s proposition of voting with one’s feet in the context of the Union, and we show that fiscal policies in the form of fiscal packages offered to a country’s residents as well as consumer confidence indicators play a decisive role in affecting that process. With 26 alternative destinations over a period of 11 years, we find that people will choose to move to a country that offers them a better fiscal surplus, higher confidence as economic agents and higher potential earnings. In light of our results, and after establishing the migration patterns, we believe that a new discussion should open regarding efficiency concerns and government policy implications.