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Why Are There Mobility Restrictions?

  • Byeongju Jeong

    (CERGE-EI)

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.

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File URL: http://econwpa.repec.org/eps/lab/papers/0012/0012004.pdf
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Paper provided by EconWPA in its series Labor and Demography with number 0012004.

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Length: 21 pages
Date of creation: 16 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpla:0012004
Note: Type of Document - Acrobat PDF; pages: 21 ; figures: included
Contact details of provider: Web page: http://econwpa.repec.org

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