Labor mobility in a monetary union
Daniela Hauser () and
Journal of International Economics, 2022, vol. 137, issue C
Internal migration flows are endogenously driven by relative labor market performance in a New Keynesian DSGE model of a monetary union calibrated to U.S. data. When labor markets are competitive, a strict focus on stabilizing unionwide inflation remains close to optimal. With search and matching frictions in regional labor markets, labor mobility across state borders introduces additional trade-offs for optimal monetary policy since workers do not internalize the full effects of their individual migration decisions. But when monetary policy is suboptimal, a mobile labor force helps to close inefficiency gaps in regional labor markets following region-specific shocks. Putting some weight on labor market outcomes in a simple instrument rule enhances welfare more when labor is mobile.
Keywords: Labor mobility; Monetary policy; Monetary union; Business cycles (search for similar items in EconPapers)
JEL-codes: E32 E52 F45 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Labor Mobility in a Monetary Union (2019)
Working Paper: Labor mobility in a monetary union (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:137:y:2022:i:c:s0022199622000320
Access Statistics for this article
Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, AndrÃ©s
More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().