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New Evidence on Mobility and Wages of the Young and the Old

Author

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  • Hansen, Jörgen

    () (Concordia University)

  • Lkhagvasuren, Damba

    () (Concordia University)

Abstract

We present new evidence on the wage and mobility of young and old workers, which is difficult to explain using standard human capital theory. Instead, we propose a simple dynamic extension of the Roy model, where worker migration and wages are jointly determined at the individual level. According to this model, a higher moving cost among older workers is the main factor driving the lower mobility among this group. Because of the higher moving costs, older workers require a higher wage increase to move across regions than younger workers, a pattern that is consistent with individual-level U.S. data. We also find an interesting dynamic effect suggesting that, given a persistent labor income shock, a higher future moving cost makes workers more mobile today.

Suggested Citation

  • Hansen, Jörgen & Lkhagvasuren, Damba, 2015. "New Evidence on Mobility and Wages of the Young and the Old," IZA Discussion Papers 9258, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9258
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    References listed on IDEAS

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    More about this item

    Keywords

    geographic mobility; labor mobility by age; labor income shock; moving cost; multi-sector model;

    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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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