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Frictional Labor Mobility

Author

Listed:
  • Benoît Schmutz

    (Ecole Polytechnique; CREST)

  • Modibo Sidibé

    (Duke University; CREST)

Abstract
We build a dynamic model of migrationwhere, in addition to usual mobility costs,workers face spatial frictions that decrease their ability to compete for distant job opportunities. We estimate the model on a matched employer-employee panel dataset describing labor market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of acceptedwages. We find that: (i) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (ii) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (iii) migration dramatically reduces lifetime inequalities due to initial location; (iv) labor mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages.

Suggested Citation

  • Benoît Schmutz & Modibo Sidibé, 2017. "Frictional Labor Mobility," Working Papers 2017-48, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2017-48
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    Cited by:

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    3. Mense, Andreas, 2021. "Secondary housing supply," FAU Discussion Papers in Economics 05/2021, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. Petra E. Todd & Weilong Zhang, 2022. "Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach," NBER Working Papers 30668, National Bureau of Economic Research, Inc.
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    9. Benoît SCHMUTZ & Grégory VERDUGO, 2020. "Do Politicians Shape the Electorate ? Evidence from French Municipalities," Working Papers 2020-18, Center for Research in Economics and Statistics, revised 01 Apr 2021.
    10. Sebastian Heise & Tommaso Porzio, 2019. "Spatial Wage Gaps in Frictional Labor Markets," Opportunity and Inclusive Growth Institute Working Papers 29, Federal Reserve Bank of Minneapolis.
    11. Diemer, Andreas, 2020. "Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom," LSE Research Online Documents on Economics 105868, London School of Economics and Political Science, LSE Library.
    12. Jung, Philip & Korfmann, Philipp & Preugschat, Edgar, 2023. "Optimal regional labor market policies," European Economic Review, Elsevier, vol. 152(C).
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    14. Xiao Chen & Hanwei Huang & Jiandong Ju & Ruoyan Sun & Jialiang Zhang, 2024. "Endogenous mobility in pandemics: Theory and evidence from the United States," CEP Discussion Papers dp1981, Centre for Economic Performance, LSE.
    15. Bocquet, L., 2024. "The Network Origin of Slow Labor Reallocation," Janeway Institute Working Papers 2427, Faculty of Economics, University of Cambridge.
    16. Chiara Lacava, 2023. "Matching and sorting across regions," Journal of Economic Geography, Oxford University Press, vol. 23(4), pages 801-822.
    17. Bocquet, L., 2024. "The Network Origin of Slow Labor Reallocation," Cambridge Working Papers in Economics 2465, Faculty of Economics, University of Cambridge.
    18. Marco Caliendo & Steffen Künn & Robert Mahlstedt, 2022. "The Intended and Unintended Effects of Promoting Labor Market Mobility," CEPA Discussion Papers 42, Center for Economic Policy Analysis.
    19. Parkhomenko, Andrii, 2016. "Opportunity to Move: Macroeconomic Effects of Relocation Subsidies," MPRA Paper 75256, University Library of Munich, Germany.
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    More about this item

    Keywords

    mobility costs; spatial frictions; migration; local labor markets;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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