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Wage Formation, Regional Migration and Local Labour Market Tightness

Author

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  • Kåre Johansen

    () (Department of Economics, Norwegian University of Science and Technology)

  • Fredrik Carlsen

    () (Department of Economics, Norwegian University of Science and Technology)

  • Knut Røed

    () (The Ragnar Frisch Centre for Economic Research, University of Oslo)

Abstract

Economic theory predicts that local labour market tightness affects local wage setting as well as individuals’ migration decisions. But how should we measure local labour market tightness? In this paper we show that the common practice of using the local rate of unemployment as the tightness indicator may be misplaced. Instead, we propose a human capital adjusted outflow rate from unemployment that can be computed on the basis of micro register data. This outflow rate performs better than traditional measures of regional labour market conditions in panel data analyses of regional wages and interregional migration.

Suggested Citation

  • Kåre Johansen & Fredrik Carlsen & Knut Røed, "undated". "Wage Formation, Regional Migration and Local Labour Market Tightness," Working Paper Series 2903, Department of Economics, Norwegian University of Science and Technology, revised 14 Feb 2003.
  • Handle: RePEc:nst:samfok:2903
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    Cited by:

    1. Falch, Torberg & Johansen, Kåre & Strøm, Bjarne, 2009. "Teacher shortages and the business cycle," Labour Economics, Elsevier, vol. 16(6), pages 648-658, December.
    2. Kristine Simson, 2015. "Explaining upper secondary school dropout: new evidence on the role of local labor markets," Empirical Economics, Springer, vol. 48(4), pages 1419-1444, June.
    3. Ekhaugen, Tyra, 2007. "Long-term Outcomes of Vocational Rehabilitation Programs: Labor Market Transitions and Job Durations for Immigrants," Memorandum 10/2007, Oslo University, Department of Economics.
    4. Fredrik Carlsen & Kåre Johansen & Lasse Sigbjørn Stambøl, 2013. "Effects of Regional Labour Markets on Migration Flows, by Education Level," LABOUR, CEIS, vol. 27(1), pages 80-92, March.
    5. Carlsen, Fredrik & Johansen, Kare, 2005. "Regional wages and subjective measures of employment opportunities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(3), pages 377-400, May.
    6. Simonetta Longhi, 2012. "Job Competition and the Wage Curve," Regional Studies, Taylor & Francis Journals, vol. 46(5), pages 611-620, August.
    7. Jani-Petri Laamanen, 2014. "Worker Turnover, Structural Change, and Inter-Regional Migration: Evidence from Finland," Finnish Economic Papers, Finnish Economic Association, vol. 27(1), pages 34-55, Autumn.

    More about this item

    Keywords

    Regional wages; interregional migration; labour market tightness;

    JEL classification:

    • 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

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