Labor market dynamics and geographical reallocations

Gaetano Basso, Salvatore Lo Bello () and Francesca Subioli ()
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Salvatore Lo Bello: Bank of Italy
Francesca Subioli: Roma 3 University

No 1430, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We study how local labor demand shocks affect internal migration using the universe of labor market flows for Italy. First, we document two novel facts: i) large and systematic differences between gross and net job and internal migration flows arise both across space and over time; ii) each gross flow is an important driver of the net growth rates. We estimate the causal impact of different-sign labor demand shocks on internal migration flows using as instrumental variable plausibly exogenous large mass hire and layoffs events. Our estimates reveal that job creation has a strong effect on the in-migration rate, whereas job destruction has a much milder effect on the out-migration rate. Crucially, we document that the large responsiveness of in-migration does not work through an increase in the number of relocating workers, but rather through changes in their chosen destination alternatives. We also find that the effects of job creation on in-migration flows have a much larger geographical reach than those of job destruction, as out-migration flows are locally concentrated.

Keywords: labor demand; turnover; layoff; geographic labor mobility (search for similar items in EconPapers)
JEL-codes: J23 J61 J63 R23 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-geo, nep-mig and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1430_23

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