Frictional Labour Mobility

Benoit Schmutz and Modibo Sidibé

The Review of Economic Studies, 2019, vol. 86, issue 4, 1779-1826

Abstract: We build a dynamic model of migration where, in addition to standard relocation costs, workers face spatial frictions that decrease their ability to compete for distant job opportunities. We estimate the model on a matched employer–employee panel dataset describing labour market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of accepted wages. We find that: (1) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (2) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (3) migration reduces lifetime inequalities by providing insurance against unsatisfactory initial location draws; (4) labour mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages.

Keywords: Mobility costs; Spatial frictions; Migration; Local labour markets (search for similar items in EconPapers)
JEL-codes: J61 J64 R12 R23 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdy056 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Frictional Labor Mobility (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:86:y:2019:i:4:p:1779-1826.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().