Analyzing the impact of labor market integration

Keisuke Kawata, Kentaro Nakajima and Yasuhiro Sato

No 3-7, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: We develop a competitive search model involving multiple regions, geographically mobile workers, and moving costs. Equilibrium mobility patterns are analyzed and characterized, indicating that shocks to a particular region, such as a productivity shock, can propagate to other regions through workers f mobility. Moreover, equilibrium mobility patterns are not efficient due to the existence of moving costs, implying that they affect social welfare not only because they are costs but also because they distort equilibrium allocation. By calibrating our framework to Japanese regional data, we demonstrate that the impacts of eliminating migration costs are comparable to those of a 30% productivity increase.

Keywords: Geographical mobility of workers; Competitive job search; Moving costs; Labor market integration (search for similar items in EconPapers)
JEL-codes: J61 J64 R23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-11
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Working Paper: Analyzing the impact of labor market integration (2013)
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