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Staying when the Going Gets Tough: The Equivalent Predictions of Option and Search Theory on Migration During Economic Downturns

Author

Listed:
  • John Gardner

    (University of Mississippi)

  • Joshua R Hendrickson

    (University of Mississippi)

Abstract

We show that both option and search theory suggest that workers should be less likely to migrate out of labor markets in which there is greater uncertainty about future economic opportunities. The intuition for this result is that, the more volatile the labor market, the greater the likelihood of such opportunities improving in the future. This result weakens the standard prediction that workers should migrate out of markets experiencing relative economic downturns.

Suggested Citation

  • John Gardner & Joshua R Hendrickson, 2017. "Staying when the Going Gets Tough: The Equivalent Predictions of Option and Search Theory on Migration During Economic Downturns," Economics Bulletin, AccessEcon, vol. 37(3), pages 2102-2110.
    • Handle: RePEc:ebl:ecbull:eb-17-00537
    as

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    References listed on IDEAS

    as
    1. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2567-2627 is not listed on IDEAS
    3. Burda, Michael C., 1993. "The determinants of East-West German migration: Some first results," European Economic Review, Elsevier, vol. 37(2-3), pages 452-461, April.
    4. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-333, April.
    5. Ian Gordon & Roger Vickerman, 1982. "Opportunity, Preference and Constraint: an Approach to the Analysis of Metropolitan Migration," Urban Studies, Urban Studies Journal Limited, vol. 19(3), pages 247-261, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    migration; local labor markets; option theory; search models;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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