Labor Mobility Within Currency Unions

Emmanuel Farhi and Iván Werning

No 20105, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the effects of labor mobility within a currency union suffering from nominal rigidities. When the demand shortfall in depressed region is mostly internal, migration may not help regional macroeconomic adjustment. When external demand is also at the root of the problem, migration out of depressed regions may produce a positive spillover for stayers. We consider a planning problem and compare its solution to the equilibrium. We find that the equilibrium is generally constrained inefficient, although the welfare losses may be small if the economy suffers mainly from internal demand imbalances.

JEL-codes: E0 F0 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-mac and nep-mig
Note: IFM PE
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Citations: View citations in EconPapers (24)

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Working Paper: Labor Mobility Within Currency Unions (2014)
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