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Interregional migration and labor market imbalances

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  • Carlo Devillanova

Abstract

This paper investigates the effects of internal migration in developed countries on widening wage inequality and high unemployment, and it addresses the geographical dimension of both problems. A two-region dynamic model is developed, which accounts for the skill composition of recent internal migration flows; it also innovates on the existing literature on migration by introducing capital-skill complementarity in the production function. The main conclusion is that migration can actually aggravate labor market imbalances. In a competitive set-up, migration temporarily amplifies the geographical dispersion of unskilled workers’ wages and raises the average wage premium of the economy. When wage rigidities are introduced, labor mobility increases regional dispersion of unskilled workers’ employment. In the short-run it may even reduce the total employment of the economy. Copyright Springer-Verlag 2004

Suggested Citation

  • Carlo Devillanova, 2004. "Interregional migration and labor market imbalances," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 229-247, June.
    • Handle: RePEc:spr:jopoec:v:17:y:2004:i:2:p:229-247
    DOI: 10.1007/s00148-003-0156-z
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    Citations

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    Cited by:

    1. Jurajda, Štepán & Terrell, Katherine, 2007. "Regional Unemployment and Human Capital in Transition Economies," IZA Discussion Papers 3176, Institute of Labor Economics (IZA).
    2. Štěpán Jurajda & Katherine Terrell, 2009. "Regional unemployment and human capital in transition economies1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 241-274, April.
    3. Hera Susanti & Arie Damayanti, 2015. "Determinants of Internal Migration in Indonesia," Working Papers in Economics and Business 201505, Faculty of Economics and Business, University of Indonesia, revised Oct 2015.
    4. Bach Nguyen, 2022. "Internal migration and earnings: Do migrant entrepreneurs and migrant employees differ?," Papers in Regional Science, Wiley Blackwell, vol. 101(4), pages 901-944, August.
    5. Carlo Devillanova & Michele Di Maio & Pietro Vertova, 2006. "Labour Mobility, Capital-Skill Complementarity and the Redistributive Effects of Trade Integration," KITeS Working Papers 188, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.

    More about this item

    Keywords

    Internal migration; unemployment; wage inequality; E24; J31; R23;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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