Economic Integration and Labor Market Institutions: Worker Mobility, Earnings Risk, and Contract Structure

Ronnie Schöb () and David Wildasin
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Ronnie Schöb: Free University of Berlin
Authors registered in the RePEc Author Service: Ronnie Schoeb

No 945, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the effects of labor market integration, in the form of worker mobility, in a model with long-term labor contracts that lead to wage rigidities and unemployment. Reflecting the interdependence of regional labor markets, we develop a general-equilibrium framework where the contract structure is simultaneously determined in all regions. It is shown that increased mobility leads to more flexible labor market institutions in which firms can more easily vary the level of employment in response to fluctuations in demand. Economic integration is potentially Pareto-improving but, in the absence of a system of compensation, workers are harmed by greater labor mobility while the owners of firms benefit from higher profits.

Keywords: labor market integration; migration; risk; unemployment (search for similar items in EconPapers)
JEL-codes: J1 J6 R0 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2003-11
New Economics Papers: this item is included in nep-eec and nep-geo
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Published - published in: Regional Science and Urban Economics, 2007, 37(2), 141-164

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Related works:
Journal Article: Economic integration and labor market institutions: Worker mobility, earnings risk, and contract structure (2007)
Working Paper: Economic Integration and Labor Market Institutions: Worker Mobility, Earnings Risk, and Contract Structure (2001)
Working Paper: Economic Integration and Labor Market Institutions; Worker Mobility, Earnings Risk, and Contract Structure (1998)
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