IDEAS home Printed from https://ideas.repec.org/p/crs/wpaper/2014-43.html
   My bibliography  Save this paper

Job Search and Migration in a System of Cities

Author

Listed:
  • Benoit Schmutz

    (CREST, Howard University)

  • Modibo Sidibé

    (CREST, Duke University)

Abstract

We build an equilibrium job search model, where workers engage in both off- and on-the-job search over a set of cities, to quantify the impact of spatial matching frictions and mobility costs on the job search process. Migration decisions, based on a dynamic utility trade-off between locations, can rationalize diverse wage dynamics as part of forward-looking spatial strategies. Our estimation results allow us to characterize each of the largest 200 French cities by a set of city-specific matching and amenity parameters and to measure the impact of distance on spatial constraints. We find that after controlling for frictions, mobility cost parameters are significantly lower than previously reported in the literature. Additional results include a robust positive correlation between on-the-job arrival rates and local wage dispersion, which provides new empirical support to the wage-posting framework and suggests an alternative explanation for the city size wage gap.

Suggested Citation

  • Benoit Schmutz & Modibo Sidibé, 2014. "Job Search and Migration in a System of Cities," Working Papers 2014-43, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2014-43
    as

    Download full text from publisher

    File URL: http://crest.science/RePEc/wpstorage/2014-43.pdf
    File Function: Crest working paper version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fabien Postel-Vinay & Hélène Turon, 2007. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," Economic Journal, Royal Economic Society, vol. 117(523), pages 1460-1503, October.
    2. Pierre‐Philippe Combes & Gilles Duranton & Laurent Gobillon & Diego Puga & Sébastien Roux, 2012. "The Productivity Advantages of Large Cities: Distinguishing Agglomeration From Firm Selection," Econometrica, Econometric Society, vol. 80(6), pages 2543-2594, November.
    3. repec:pri:cepsud:223shephard is not listed on IDEAS
    4. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
    5. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, January.
    6. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    7. Laurent Gobillon & Francois-Charles Wolff, 2011. "Housing and Location Choices of Retiring Households: Evidence from France," Urban Studies, Urban Studies Journal Limited, vol. 48(2), pages 331-347, February.
    8. Joshua Hojvat Gallin, 2004. "Net Migration and State Labor Market Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 1-22, January.
    9. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    10. Costas Meghir & Renata Narita & Jean-Marc Robin, 2015. "Wages and Informality in Developing Countries," American Economic Review, American Economic Association, vol. 105(4), pages 1509-1546, April.
    11. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    12. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8grh35j2 is not listed on IDEAS
    13. Thierry Magnac & David Thesmar, 2002. "Identifying Dynamic Discrete Decision Processes," Econometrica, Econometric Society, vol. 70(2), pages 801-816, March.
    14. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    15. Rupert, Peter & Wasmer, Etienne, 2012. "Housing and the labor market: Time to move and aggregate unemployment," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 24-36.
    16. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    17. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
    18. Alan Manning & Barbara Petrongolo, 2017. "How Local Are Labor Markets? Evidence from a Spatial Job Search Model," American Economic Review, American Economic Association, vol. 107(10), pages 2877-2907, October.
    19. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    20. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 477-506.
    21. Nathaniel Baum-Snow & Ronni Pavan, 2012. "Understanding the City Size Wage Gap," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 88-127.
    22. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Post-Print hal-03458567, HAL.
    23. Phelps, Edmund S, 1969. "The New Microeconomics in Inflation and Employment Theory," American Economic Review, American Economic Association, vol. 59(2), pages 147-160, May.
    24. Banks, Jeffrey S & Sundaram, Rangarajan K, 1994. "Switching Costs and the Gittins Index," Econometrica, Econometric Society, vol. 62(3), pages 687-694, May.
    25. Allen Head & Huw Lloyd-Ellis & Hongfei Sun, 2014. "Search, Liquidity, and the Dynamics of House Prices and Construction," American Economic Review, American Economic Association, vol. 104(4), pages 1172-1210, April.
    26. Andrew Shephard, 2017. "Equilibrium Search And Tax Credit Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(4), pages 1047-1088, November.
    27. repec:hal:spmain:info:hdl:2441/dc0ckec3fcb29ms9850c12h1p is not listed on IDEAS
    28. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    29. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
    30. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    31. Weitzman, Martin L, 1979. "Optimal Search for the Best Alternative," Econometrica, Econometric Society, vol. 47(3), pages 641-654, May.
    32. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
    33. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage bargaining with on-the-job search: theory and evidence," Post-Print hal-03471856, HAL.
    34. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    35. Lucas, Robert E.B., 1993. "Internal migration in developing countries," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 13, pages 721-798, Elsevier.
    36. Grégory Jolivet & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "The empirical content of the job search model: labor mobility and wage distributions in Europe and the US," Post-Print hal-03587657, HAL.
    37. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Post-Print hal-03587660, HAL.
    38. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," Econometrica, Econometric Society, vol. 70(6), pages 2367-2420, November.
    39. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    40. Jesper Bagger & Francois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages," Post-Print hal-01301431, HAL.
    41. repec:hal:spmain:info:hdl:2441/7rep5mp5ij95l94ec64n5tdclp is not listed on IDEAS
    42. Grégory Jolivet & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "The empirical content of the job search model: labor mobility and wage distributions in Europe and the US," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03587657, HAL.
    43. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
    44. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    45. repec:hal:spmain:info:hdl:2441/dc0ckec3fcb29ms985085gkbp is not listed on IDEAS
    46. Andrew Shephard, 2011. "Equilibrium Search and Tax Credit Reform," Working Papers 1336, Princeton University, Department of Economics, Center for Economic Policy Studies..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benoît Schmutz & Modibo Sidibé, 2019. "Frictional Labour Mobility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1779-1826.
    2. Naoki Aizawa & Hanming Fang, 2020. "Equilibrium Labor Market Search and Health Insurance Reform," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4258-4336.
    3. Niklas Engbom & Christian Moser, 2022. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," American Economic Review, American Economic Association, vol. 112(12), pages 3803-3847, December.
    4. Benoit Schmutz & Modibo Sidibé & Elie Vidal-Naquet, 2021. "Why Are Low-Skilled Workers Less Mobile? The Role of Mobility Costs and Spatial Frictions," Annals of Economics and Statistics, GENES, issue 142, pages 283-304.
    5. Fatih Karahan & Serdar Ozkan & Jae Song, 2019. "Anatomy of Lifetime Earnings Inequality: Heterogeneity in Job Ladder Risk vs. Human Capital," Staff Reports 908, Federal Reserve Bank of New York.
    6. Naoki Aizawa & Hanming Fang, 2015. "Equilibrium Labor Market Search and Health Insurance Reform, Second Version," PIER Working Paper Archive 15-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Jun 2015.
    7. Rasmus Lentz & Jesper Bagger, 2009. "An Empirical Model of Wage Dispersion with Sorting," 2009 Meeting Papers 964, Society for Economic Dynamics.
    8. Jesper Bagger & Rasmus Lentz, 2014. "An Empirical Model of Wage Dispersion with Sorting," Economics Working Papers 2014-11, Department of Economics and Business Economics, Aarhus University.
    9. Christopher Taber & Rune Vejlin, 2020. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," Econometrica, Econometric Society, vol. 88(3), pages 1031-1069, May.
    10. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    11. Zhang, W., 2018. "Distribution Effects of Local Minimum Wage Hikes: A Spatial Job Search Approach," Cambridge Working Papers in Economics 1889, Faculty of Economics, University of Cambridge.
    12. Weilong Zhang, 2018. "Distributional Effects of Local Minimum Wage Hikes: A Spatial Job Search Approach," 2018 Meeting Papers 12, Society for Economic Dynamics.
    13. Julien Prat, 2010. "The rate of learning-by-doing: estimates from a search-matching model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(6), pages 929-962.
    14. Ambra Poggi, 2013. "Labor mobility network and intra firm wage dispersion," LABORatorio R. Revelli Working Papers Series 133, LABORatorio R. Revelli, Centre for Employment Studies.
    15. Tamas Papp, 2013. "Frictional wage dispersion with Bertrand competition: an assessment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 540-552, July.
    16. Carlos Carrillo-Tudela & Eric Smith, 2017. "Search Capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 191-211, January.
    17. Chéron, Arnaud & Rouland, Bénédicte, 2011. "Endogenous job destructions and the distribution of wages," Labour Economics, Elsevier, vol. 18(6), pages 845-852.
    18. Benoît Schmutz & Modibo Sidibé, 2021. "Search and Zipf: A model of Frictional Spatial Equilibrium," Working Papers 2021-01, Center for Research in Economics and Statistics.
    19. Rasmus Lentz & Jesper Bagger, 2015. "An Empirical Model of Wage Dispersion with Sorting," 2015 Meeting Papers 1345, Society for Economic Dynamics.
    20. Simon Jäger & Benjamin Schoefer & Samuel Young & Josef Zweimüller, 2020. "Wages and the Value of Nonemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 1905-1963.

    More about this item

    Keywords

    local labor market; frictions; on-the-job search; migration;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2014-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Secretariat General (email available below). General contact details of provider: https://edirc.repec.org/data/crestfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.