Employment Status, Endogenous Regional Mobility, and Spatial Dependencies in Labor Markets

René Fahr () and Uwe Sunde

No 521, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates spatial correlation in the matching process of vacant jobs and job seekers. The importance of the interactions of regional labor markets in West Germany is highlighted in several dimensions. We test for spatial autocorrelation in regional hires, unemployment and vacancy levels, we examine the patterns of new matches in regions, identify clusters of regions of particularly intense interregional matching, and examine the effects of German re-unification. After setting-out a simple model of endogenous regional mobility and endogenous on-the-job search, we analyze the composition of new hires with respect to regional origin and previous employment status, the determinants of this composition, and the interaction of these characteristics. The results shed new light on the puzzle raised in the literature, which finds a large variation in unemployment rates, combined with little inter-regional migration. We find evidence in favour of labor market determined migration and against the ’internal migration puzzle’ found for other European countries and partly for the United States.

Keywords: job competition; internal migration; on-the-job search; composition of hires; unemployment (search for similar items in EconPapers)
JEL-codes: J21 J61 J64 R12 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2002-06
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

Published - revised version published as 'Spatial mobility and competition for jobs: Some theory and evidence for Western Germany' in: Regional Science and Urban Economics, 2006, 36 (6), 802 - 825

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