New Evidence on Mobility and Wages of the Young and the Old

Jorgen Hansen and Damba Lkhagvasuren

No 9258, IZA Discussion Papers from IZA Network @ LISER

Abstract: We present new evidence on the wage and mobility of young and old workers, which is difficult to explain using standard human capital theory. Instead, we propose a simple dynamic extension of the Roy model, where worker migration and wages are jointly determined at the individual level. According to this model, a higher moving cost among older workers is the main factor driving the lower mobility among this group. Because of the higher moving costs, older workers require a higher wage increase to move across regions than younger workers, a pattern that is consistent with individual-level U.S. data. We also find an interesting dynamic effect suggesting that, given a persistent labor income shock, a higher future moving cost makes workers more mobile today.

Keywords: geographic mobility; labor mobility by age; labor income shock; moving cost; multi-sector model (search for similar items in EconPapers)
JEL-codes: E24 J31 J61 R23 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-08
New Economics Papers: this item is included in nep-age, nep-dge, nep-lab, nep-mac, nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9258

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