Housing and the Labor Market: Time to Move and Aggregate Unemployment

Peter Rupert () and Etienne Wasmer

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: The Mortensen-Pissarides model with unemployment benefits and taxes has been able to account for the variation in unemployment rates across countries but does not explain why geographical mobility is very low in some countries (on average, three times lower in Europe than in the U.S.). We build a model in which both unemployment and mobility rates are endogenous. Our findings indicate that an increase in unemployment benefits and in taxes does not generate a strong decline in mobility and accounts for only half to two-thirds of the difference in unemployment from the U.S. to Europe. We find that with higher commuting costs the effect of housing frictions plays a large role and can generate a substantial decline in mobility. We show that such frictions can account for the differences in unemployment and mobility between the U.S. and Europe.

Keywords: commuting; search model; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2009-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.escholarship.org/uc/item/1bv529kn.pdf;origin=repeccitec (application/pdf)

Related works:
Journal Article: Housing and the labor market: Time to move and aggregate unemployment (2012)
Working Paper: Housing and the Labor Market: Time to Move and Aggregate Unemployment (2009)
Working Paper: Housing and the Labor Market: Time to Move and Aggregate Unemployment (2009)
Working Paper: Housing and the Labor Market: Time to Move and Aggregate Unemployment (2009)
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:cdl:ucsbec:qt1bv529kn

Access Statistics for this paper

More papers in University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().