Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO
AbstractThe present paper describes the modelling of regional labour markets in the newly developed dynamic spatial general equilibrium model RHOMOLO, where the labour market equilibrium is determined by firms' labour demand, a wage-curve determining unemployment, and inter- regional labour migration. The RHOMOLO model is parameterised by estimating the key structural parameters econometrically. In order to illustrate the potential of the proposed dynamic spatial general equilibrium approach for analysing regionally integrated labour markets, we carry out simulations showing the effects of a reduction in transportation cost, and assess the impact on regional labour markets. Our results confirm that wages and unemployment are by far the most important channels of adjustment to macro-economic and policy shocks in the EU. In contrast, labour migration plays a secondary role in labour market adjustments in the EU. Our results also suggest that the relationship between market access, labour demand and labour supply is non-linear and spatially inter-dependent, which underlines the importance of the proposed dynamic spatial general equilibrium approach.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 36.
Date of creation: 2013
Date of revision:
Other versions of this item:
- D'Artis Kancs & Enrique Lopez-Bazo & Fabio Manca & Damiaan Persyn, 2012. "Modelling Migration and Regional Labour Markets: An Application of New Economic Geography Model Rhomolo," ERSA conference papers ersa12p808, European Regional Science Association.
- Andries Brandsma & d’Artis Kancs & Damiaan Persyn, 2013. "Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO," JRC-IPTS Working Papers JRC80825, Institute for Prospective and Technological Studies, Joint Research Centre.
- d'Artis Kancs & Andries Brandsma & Damiaan Persyn, 2013. "Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO," ERSA conference papers ersa13p262, European Regional Science Association.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- O - Economic Development, Technological Change, and Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-GEO-2013-03-23 (Economic Geography)
- NEP-LAB-2013-03-23 (Labour Economics)
- NEP-MIG-2013-03-23 (Economics of Human Migration)
- NEP-URE-2013-03-23 (Urban & Real Estate Economics)
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