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Labor Market Frictions and Moving Costs of the Employed and Unemployed

Tyler Ransom ()

No 12139, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the role of labor market frictions and moving costs in explaining the migration behavior of US workers by employment status. Using data on low-skilled workers from the Survey of Income and Program Participation (SIPP), I estimate a dynamic model of individual labor supply and migration decisions. The model incorporates a reduced-form search model and allows for migration for non-market reasons. My estimates show that moving costs are substantial and that labor market frictions primarily inhibit migration of the employed. I use the model to study migration responses to local labor market shocks and to a moving subsidy. Workers' preferences for non-market amenities, coupled with substantial moving costs and employment frictions, grant market power to incumbent employers. Large moving costs also likely affect employers' recruiting behavior.

Keywords: migration; job search; dynamic discrete choice (search for similar items in EconPapers)
JEL-codes: C35 E32 J22 J61 J64 R23 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2019-02
New Economics Papers: this item is included in nep-dcm, nep-dge, nep-lab, nep-mac, nep-mig and nep-ure
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