Why Are There Mobility Restrictions?
AbstractMobility restrictions (e.g., severance payment, life-long tenure, and divorce ban) are widely observed. This paper is an attempt to understand why there are these restrictions. I present a model economy that features production teams and focuses on the search for partners and the formation and break-up of teams. Under no restrictions, there is too much searching and breaking-up because the individual decision problem ignores the loss of the deserted partner’s utility. Arrangements such as break-up payment and break-up ban can improve welfare. Thus the paper rationalizes mobility restrictions as welfare-improving arrangements.
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Bibliographic InfoPaper provided by EconWPA in its series Labor and Demography with number 0012004.
Length: 21 pages
Date of creation: 16 Feb 2001
Date of revision:
Note: Type of Document - Acrobat PDF; pages: 21 ; figures: included
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Mobility restriction; Production team; Search; Break-up;
Other versions of this item:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-27 (All new papers)
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