Frictional Labour Mobility

Abstract

We build a dynamic model of migration where, in addition to standard relocation 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 labour 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 accepted wages. We find that: (1) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (2) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (3) migration reduces lifetime inequalities by providing insurance against unsatisfactory initial location draws; (4) labour mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages.

Labor Market Frictions and Moving Costs of the Employed and Unemployed

“…xxix This assumption is likely unrealistic, since moving is only salient when certain events in life trigger a move (for example, pursuit of education, change of job, change of household structure, health of family members, etc.). For recent work that incorporates this feature, see Schluter and Wilemme (2018) and Schmutz and Sidibé (2019). Even if my estimated moving costs are overstated, it is still the case that preferences for non-market amenities and labor market frictions reduce mobility across labor markets.…”

“…In order to preserve confidentiality, the data used here-which make use of detailed The SIPP's longitudinal structure, combined with its large-sized cross-section makes it useful for studying migration and labor supply behavior. Because it is a survey, it can distinguish between unemployment and labor force detachment-two effects that are conflated in studies that use administrative data such as tax records (Yagan, 2014;Schluter and Wilemme, 2018;Schmutz and Sidibé, 2019).…”

An Investigation of the Role of Entrepreneurship Agencies for Entrepreneurship Development in Nigeria

“…The educational process could assist in an accurate perception of opportunities and can have an effect on entrepreneurship emergence behaviour and performance. (Aluko, 1993, Schmutz andSidibe, 2019) Motivation Theory: It can be regarded as acquired needs theory. It is a view that a person has three types of needs at any at a given time, which are needed for achievement that means to get success with one's own efforts.…”

Spatial Wage Gaps in Frictional Labor Markets

“…Third, our work is related to job ladder models à la Burdett and Mortensen (1998) with labor mobility across sectors or space. Schmutz and Sidibé (2018) build a partial equilibrium model where identical workers receive job offers both from their current and from other locations. Consistent with our work, they estimate small migration costs.…”