Demographics and Sectoral Reallocations: A Search Theory with Immobile Workers

Simona Cociuba () and James (Jim) MacGee ()

No 20182, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: We show that a decline in the young share of the population exacerbates sectoral reallocation costs. We develop a three sector, perpetual youth search model with sector-specific human capital and two interconnected frictions: sectoral preferences, which imply that only some workers are mobile across sectors, and a wage bargaining distortion, whereby mobile workers’ outside option of searching in the growing sector dampens the fall in shrinking sector wages, leading to rest unemployment. In our parameterized model, output losses after a sectoral reallocation are significant. As population growth declines from 3 to −1 percent, output losses increase sevenfold, and there are extended periods of high unemployment and low vacancies.

Date: 2018
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1821&context=economicsresrpt (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Demographics and Sectoral Reallocations: A Search Theory with Immobile Workers (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwo:uwowop:20182

Ordering information: This working paper can be ordered from
https://economics.uw ... itting_ordering.html
The price is Paper copy available by mail at a cost of $10.00 Canadian each.

Access Statistics for this paper

More papers in University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics Department of Economics, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2.
Bibliographic data for series maintained by ().