Directional dummies in gravity models: application to Japanese inter-municipal migration by age-sex group

For a given subset of regions, origin–destination flows are decomposed into (1) flows from the subset to its complement, (2) flows from the complement to the subset, (3) flows within the subset, and (4) flows within the complement. With the last flow as the base category, we define three directional dummy variables. We analyze Japan’s inter-municipal migrations by age-sex group using a standard gravity model with directional dummy variables whose regional subsets consist of major cities. Migrations between major cities are more frequent in age groups 30–59, especially for men, than migrations between other municipalities. This observation reflects the fact that many business-related transitions are taking place between major cities. Models with only origin and destination dummies cannot detect such an effect.