Why Are There Mobility Restrictions?

Byeongju Jeong

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: Mobility restrictions (e.g., severance payment, life-long tenure, and divorce ban) are widely observed. This paper is an attempt to understand why there are these restrictions. I present a model economy that features production teams and focuses on the search for partners and the formation and break-up of teams. Under no restrictions, there is too much searching and breaking-up because the individual decision problem ignores the loss of the deserted partner’s utility. Arrangements such as break-up payment and break-up ban can improve welfare. Thus the paper rationalizes mobility restrictions as welfare-improving arrangements.

Keywords: Mobility restriction; production team; search; break-up. (search for similar items in EconPapers)
JEL-codes: D62 J60 (search for similar items in EconPapers)
Date: 1999-09
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Related works:
Working Paper: Why Are There Mobility Restrictions? (2001)
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