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Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy

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  • Pissarides, Christopher A
  • McMaster, Ian

Abstract

This paper estimates the response of interregional net migration to wage and unemployment differentials and the adjustment of relative wages over time in Britain. It finds that the regional system eventually eliminates disequilibrium unemployment differentials and adjusts to an equilibrium where a region's relative wage compensates for its unemployment differential at the rate 3:1 (i.e., 3 percent higher wage for a percentage point higher unemployment). Adjustment is very slow, so regional policy might save several person-years of unemployment by offering incentives for the faster movement of people and jobs. Copyright 1990 by Royal Economic Society.

Suggested Citation

  • Pissarides, Christopher A & McMaster, Ian, 1990. "Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 812-831, October.
  • Handle: RePEc:oup:oxecpp:v:42:y:1990:i:4:p:812-31
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    References listed on IDEAS

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    1. Azariadis, Costas & Reichlin, Pietro, 1996. "Increasing returns and crowding out," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 847-877, May.
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