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Why Are There Mobility Restrictions?

Author

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  • Byeongju Jeong

    (CERGE-EI)

Abstract

Mobility restrictions (e.g., severance payment, life-long tenure, and divorce ban) are widely observed. This paper is an attempt to understand why there are these restrictions. I present a model economy that features production teams and focuses on the search for partners and the formation and break-up of teams. Under no restrictions, there is too much searching and breaking-up because the individual decision problem ignores the loss of the deserted partner’s utility. Arrangements such as break-up payment and break-up ban can improve welfare. Thus the paper rationalizes mobility restrictions as welfare-improving arrangements.

Suggested Citation

  • Byeongju Jeong, 2001. "Why Are There Mobility Restrictions?," Labor and Demography 0012004, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0012004
    Note: Type of Document - Acrobat PDF; pages: 21 ; figures: included
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0012/0012004.pdf
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    Keywords

    Mobility restriction; Production team; Search; Break-up;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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