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Frictional Labor Mobility

Author

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  • Benoît Schmutz

    (Ecole Polytechnique; CREST)

  • Modibo Sidibé

    (Duke University; CREST)

Abstract

We build a dynamic model of migrationwhere, in addition to usual mobility costs,workers face spatial frictions that decrease their ability to compete for distant job opportunities. We estimate the model on a matched employer-employee panel dataset describing labor market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of acceptedwages. We find that: (i) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (ii) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (iii) migration dramatically reduces lifetime inequalities due to initial location; (iv) labor mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages.

Suggested Citation

  • Benoît Schmutz & Modibo Sidibé, 2017. "Frictional Labor Mobility," Working Papers 2017-48, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2017-48
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    Cited by:

    1. Benoît SCHMUTZ & Grégory VERDUGO, 2020. "Do Politicians Shape the Electorate ? Evidence from French Municipalities," Working Papers 2020-18, Center for Research in Economics and Statistics, revised 01 Apr 2021.
    2. Heise, Sebastian & Porzio, Tommaso, 2019. "Spatial Wage Gaps in Frictional Labor Markets," CEPR Discussion Papers 14197, C.E.P.R. Discussion Papers.
    3. Parkhomenko, Andrii, 2016. "Opportunity to Move: Macroeconomic Effects of Relocation Subsidies," MPRA Paper 75256, University Library of Munich, Germany.
    4. Mense, Andreas, 2021. "Secondary housing supply," FAU Discussion Papers in Economics 05/2021, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    5. Sebastian Heise & Tommaso Porzio, 2019. "Spatial Wage Gaps and Frictional Labor Markets," Staff Reports 898, Federal Reserve Bank of New York.
    6. David De La Croix & Frédéric Docquier & Alice Fabre & Robert Stelter, 2019. "The Academic Market And The Rise Of Universities In Medieval And Early Modern Europe (1000-1800)," LIDAM Discussion Papers IRES 2019019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Benoît Schmutz & Modibo Sidibé, 2021. "Search and Zipf: A model of Frictional Spatial Equilibrium," Working Papers 2021-01, Center for Research in Economics and Statistics.
    8. Diemer, Andreas, 2020. "Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom," LSE Research Online Documents on Economics 105868, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    mobility costs; spatial frictions; migration; local labor markets;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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