Labour mobility costs across sectors and regions in a cross-section: How old is the captain?

Marcio Cruz, Emmanuel Milet, Marcelo Olarreaga and Jean-Marc Solleder

No 19209, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We estimate the mobility costs of workers across sectors and regions in a large sample of developing countries. We develop a new methodology that uses cross-sectional data only. This is motivated by panel data being typically unavailable for developing countries. Our main identifying assumption for the labour mobility costs is that the age of the worker, or rather the time to retirement, is an important determinant of whether it is profitable to change jobs. We estimate the median sector mobility cost to be 0.77 times workers’ annual labour income, the median region mobility cost to be 0.49 times workers’ annual income, and the median cost of moving both sector and region to be 0.98 times workers’ annual income. Women face higher mobility costs. The median welfare gains from removing sector, region, and sector/region mobility costs are estimated at 3, 2, and 5 per cent of real annual wages, respectively.

JEL-codes: E24 F13 F16 O15 (search for similar items in EconPapers)
Date: 2024-07
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