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Analyzing the impact of labor market integration

  • Keisuke Kawata

    (Graduate School for International Development and Cooperation)

  • Kentaro Nakajima

    (Graduate School of Economics, Tohoku University)

  • Yasuhiro Sato

    (Graduate School of Economics, Osaka University)

We develop a competitive search model involving multiple regions, geographically mobile workers, and moving costs. Equilibrium mobility patterns are analyzed and characterized, indicating that shocks to a particular region, such as a productivity shock, can propagate to other regions through workersf mobility. Moreover, equilibrium mobility patterns are not efficient due to the existence of moving costs, implying that they affect social welfare not only because they are costs but also because they distort equilibrium allocation. By calibrating our framework to Japanese regional data, we demonstrate that the impacts of eliminating migration costs are comparable to those of a 30% productivity increase.

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File URL: http://ir.lib.hiroshima-u.ac.jp/files/public/35232/20141016204615119446/IDEC-DP2_03-7.pdf
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Paper provided by Hiroshima University, Graduate School for International Development and Cooperation (IDEC) in its series IDEC DP2 Series with number 3-7.

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Length: 38 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:hir:idecdp:3-7
Contact details of provider: Web page: http://www.hiroshima-u.ac.jp/en/idec/

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  1. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
  2. Ortega, Javier, 2000. "Pareto-Improving Immigration in an Economy with Equilibrium Unemployment," Economic Journal, Royal Economic Society, vol. 110(460), pages 92-112, January.
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  4. Bayer, Christian & Juessen, Falko, 2006. "On the Dynamics of Interstate Migration: Migration Costs and Self-Selection," Technical Reports 2006,38, Technische Universität Dortmund, Sonderforschungsbereich 475: Komplexitätsreduktion in multivariaten Datenstrukturen.
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  9. Masters, Adrian, 2011. "Commitment, advertising and efficiency of two-sided investment in competitive search equilibrium," Journal of Economic Dynamics and Control, Elsevier, vol. 35(7), pages 1017-1031, July.
  10. Hatton, Timothy J & Massimiliano Tani, 2003. "Immigration and Inter-Regional Mobility in the UK, 1982-2000," Royal Economic Society Annual Conference 2003 101, Royal Economic Society.
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  16. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  17. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  18. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
  19. Kentaro Nakajima & Takatoshi Tabuchi, 2007. "Estimating Interregional Utility Differentials," CIRJE F-Series CIRJE-F-496, CIRJE, Faculty of Economics, University of Tokyo.
  20. Miyagiwa, Kaz, 1991. "Scale Economies in Education and the Brain Drain Problem," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 743-59, August.
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