Does Rural Household Income Depend on Neighboring Urban Centers? Evidence from Israel

Migration flows can be affected by differential wages, housing costs and other amenities, and by commuting costs and costs of migration. An income-generating equation, which includes characteristics of nearby urban communities among the explanatory variables, is estimated for rural households in Israeli moshav villages using 2006 survey data. the results show that the population of nearby urban communities is significantly and positively associated with rural household per-capita income. The same is true for mean income in these communities. In addition, distance from urban communities affects rural income negatively, suggesting that commuting costs are important determinants of the direction of the net migration of high-income households.