CAN SEARCH‐MATCHING MODELS EXPLAIN MIGRATION AND WAGE AND UNEMPLOYMENT GAPS IN DEVELOPING ECONOMIES? A CALIBRATION APPROACH*

Chul-In Lee

Journal of Regional Science, 2010, vol. 50, issue 2, 635-654

Abstract: ABSTRACT A recent theoretical literature tries to understand the migration pattern in developing economies through the lens of search‐matching (SM) models, but there has been little empirical support for these models. This paper tries to fill this gap by examining whether the models are consistent with the data from developing economies. Combined with some suggestive statistics, our calibration exercise reveals that when augmented with additional frictions (fixed costs of starting up new businesses and mobility costs), our SM model can account for the data and is at least more consistent with the data than traditional Harris–Todaro models.

Date: 2010
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