Analyzing the impact of labor market integration

Keisuke Kawata, Kentaro Nakajima and Yasuhiro Sato

No 13-28, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We develop a competitive search model involving multiple regions, geographically mobile work- ers, and moving costs. Equilibrium mobility patterns are analyzed and characterized, indicating that shocks to a particular region, such as a productivity shock, can propagate to other regions through workers f mobility. Moreover, equilibrium mobility patterns are not efficient due to the existence of moving costs, implying that they affect social welfare not only because they are costs but also be- cause they distort equilibrium allocation. By calibrating our framework to Japanese regional data, we demonstrate that the impacts of eliminating migration costs are comparable to those of a 30% productivity increase.

Keywords: geographical mobility of workers; competitive job search; moving costs; labor market inte- gration (search for similar items in EconPapers)
JEL-codes: J61 J64 R23 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-11
New Economics Papers: this item is included in nep-dge, nep-lab, nep-lma, nep-mig and nep-ure
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Working Paper: Analyzing the impact of labor market integration (2013)
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