Regional Reallocation and Housing Markets in a Model of Frictional Migration

Plamen Nemov
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Plamen Nemov: Norwegian Business School (BI)

Review of Economic Dynamics, 2015, vol. 18, issue 4, 863-880

Abstract: Migration frictions are important for understanding key features of gross migration and housing markets. This paper studies a multi-region equilibrium model with frictional migration. Idiosyncratic preference shocks, a mobility cost, and imperfectly directed migration lead to slow worker reallocation in response to changes in local conditions. This leads to a dependence of local house prices on the history of labor market shocks. The model accounts for the comovements of unemployment and rental and house prices with gross migration observed in a panel of U.S. cities. Structural estimation reveals a high mobility cost for unemployed workers and a low probability of directed migration. Both of these imply that regional reallocation has a limited importance for the aggregate labor market and that the effects of housing markets on reallocation are small. (Copyright: Elsevier)

Keywords: Reallocation; Housing markets; Gross migration; Indirect inference (search for similar items in EconPapers)
JEL-codes: E24 J61 J64 R23 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.red.2015.08.002

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