Sectoral Mobility and Unemployment with Heterogeneous Moving Costs

Damba Lkhagvasuren and Roy Nitulescu ()
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Roy Nitulescu: Concordia University, https://www.concordia.ca/artsci/economics.html

No 13003, Working Papers from Concordia University, Department of Economics

Abstract: A simple equilibrium model of sectoral reallocation is developed in order to study the impact of heterogeneous moving costs on unemployment. The model blends key elements of standard sectoral reallocation theory and the competitive search model. Heterogeneity in moving costs is introduced via mobile and immobile workers. According to the model, the share of mobile workers lowers aggregate unemployment. The model reveals that when labor mobility is driven by an idiosyncratic sector-worker match effect, the share of mobile workers raises the unemployment rate of immobile workers. However, when labor mobility is driven by a sectoral level aggregate disturbance, mobile workers can have a non-monotonic, but globally negative impact on the unemployment rate of immobile workers.

Keywords: sectoral unemployment; aggregate unemployment; island model; competitive search; net and gross mobility; excess mobility; homeownership; aging population (search for similar items in EconPapers)
JEL-codes: J61 J62 J63 J64 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-09-08, Revised 2013-05-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Sectoral Mobility and Unemployment with Heterogeneous Moving Costs (2013)
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