Competitive Search with Moving Costs

Keisuke Kawata, Kentaro Nakajima and Yasuhiro Sato

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We developed a competitive search model involving multiple regions, geographically mobile workers, and moving costs. Equilibrium mobility patterns were analyzed and characterized, and the results indicate that shocks to a particular region, such as a productivity shock, can propagate to other regions through workers' mobility. Moreover, equilibrium mobility patterns are not efficient because of the existence of moving costs, implying that they affect social welfare because not only are they costs but also they distort equilibrium allocation. By calibrating our framework to Japanese regional data, we demonstrate the extent to which changes in moving costs affect unemployment and social welfare.

Pages: 42 pages
Date: 2014-08
New Economics Papers: this item is included in nep-dge, nep-lab, nep-mic and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:14052

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