This paper utilises the framework of a Polytomous Logit Model for analysing and testing the economic behaviour of worker migrants between different regions (states) in India. The model is estimated, perhaps for the first time in India, with policy and non-policy economic variables, using 1971 Population (migration) Census data. The empirical results with regard to policy variables provide new evidence that federal transfers have resource (labour) allocation effects rather than pure income redistribution effects and that workers move from high tax regions to low tax regions. The results support the familiar Tiebout hypothesis and argue for an inter-regional migration policy for India as well as for other developing countries.