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Why Are There Mobility Restrictions?

Author

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  • Byeongju Jeong

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, 1999. "Why Are There Mobility Restrictions?," CERGE-EI Working Papers wp152, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp152
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    Keywords

    Mobility restriction; production team; search; break-up.;
    All these keywords.

    JEL classification:

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

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