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Analyzing the impact of labor market integration

  • Keisuke Kawata


    (Hiroshima University)

  • Kentaro Nakajima


    (Tohoku University)

  • Yasuhiro Sato


    (Osaka University)

We develop a competitive search model involving multiple regions, geographically mobile work- ers, 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 be- cause 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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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-28.

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Length: 39 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:osk:wpaper:1329
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  1. Guido Menzio & Shouyong Shi, 2009. "Block Recursive Equilibria for Stochastic Models of Search on the Job," NBER Working Papers 14907, National Bureau of Economic Research, Inc.
  2. John Kennan & James R. Walker, 2003. "The Effect of Expected Income on Individual Migration Decisions," NBER Working Papers 9585, National Bureau of Economic Research, Inc.
  3. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
  4. Moen, E.R., 1995. "Competitive Search Equilibrium," Memorandum 37/1995, Oslo University, Department of Economics.
  5. Northwestern University & Damba Lkhagvasuren, 2007. "Big Locational Differences in Unemployment Despite High Labor Mobility," 2007 Meeting Papers 922, Society for Economic Dynamics.
  6. Hatton, Timothy J. & Tani, Massimiliano, 2003. "Immigration and Inter-Regional Mobility in the UK, 1982-2000," CEPR Discussion Papers 4061, C.E.P.R. Discussion Papers.
  7. Shouyong Shi, 2009. "Directed Search for Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 77(2), pages 561-584, 03.
  8. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  9. repec:ese:iserwp:2010-05 is not listed on IDEAS
  10. Miyagiwa, K., 1989. "Scale Economics In Education And The Brain Drain Problem," Working Papers 89-09, University of Washington, Department of Economics.
  11. 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.
  12. Bayer, Christian & Juessen, Falko, 2008. "On the Dynamics of Interstate Migration: Migration Costs and Self-Selection," IZA Discussion Papers 3330, Institute for the Study of Labor (IZA).
  13. Birgitta Rabe & Mark P. Taylor, 2012. "Differences in Opportunities? Wage, Employment and House-Price Effects on Migration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(6), pages 831-855, December.
  14. Daron Acemoglu & Robert Shimer, 1998. "Efficient Unemployment Insurance," NBER Working Papers 6686, National Bureau of Economic Research, Inc.
  15. Ortega, Javier, 2000. "Pareto-Improving Immigration in an Economy with Equilibrium Unemployment," Economic Journal, Royal Economic Society, vol. 110(460), pages 92-112, January.
  16. Coen-Pirani, Daniele, 2010. "Understanding gross worker flows across U.S. states," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 769-784, October.
  17. Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
  18. Kentaro Nakajima & Takatoshi Tabuchi, 2007. "Estimating Interregional Utility Differentials," CIRJE F-Series CIRJE-F-496, CIRJE, Faculty of Economics, University of Tokyo.
  19. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
  20. David E. Wildasin, 2000. "Labor-Market Integration, Investment in Risky Human Capital, and Fiscal Competition," American Economic Review, American Economic Association, vol. 90(1), pages 73-95, March.
  21. Molho, Ian, 2001. "Spatial Search, Migration and Regional Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 269-83, May.
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