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Housing and the labor market: Time to move and aggregate unemployment

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  • Rupert, Peter
  • Wasmer, Etienne

Abstract

Conventional macro-search models (Mortensen and Pissarides) with unemployment benefits and taxes have been able to account for the variation in unemployment rates across countries but do not account for the role geographic mobility or commuting time might play. We build a model in which both unemployment and mobility rates are endogenous. Our findings indicate that an increase in unemployment benefits and in taxes does not generate a strong decline in mobility but does increase unemployment as in the standard model. We find that with higher commuting costs the effect of housing frictions plays a large role and can generate a substantial decline in mobility.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:moneco:v:59:y:2012:i:1:p:24-36
    DOI: 10.1016/j.jmoneco.2011.10.008
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    References listed on IDEAS

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    1. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521875387, October.
    2. 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.
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    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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