Regional Employment Subsidies and Migration
Leonard Wilson ()
Canadian Journal of Economics, 1993, vol. 26, issue 2, 366-79
In this paper, the traditional efficiency basis for employment subsidies to high unemployment regions is modified to incorporate a description of the transition to employment. Expectations of employment depend not just on the rate of unemployment but also on job turnover rates; thus unemployed in the high unemployment regions are more incline to migrate. At an observed migration equilibrium, implicit migration costs are higher and expected income lower than they would be in the simple model. This means that the shadow price of a job in the high-unemployment region is lower than in the simple model and less than the wage rate.
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