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Labor Market Frictions and Moving Costs of the Employed and Unemployed

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  • Ransom, Tyler

    (University of Oklahoma)

Abstract

This paper examines the role of labor market frictions and moving costs in explaining the migration behavior of US workers by employment status. Using data on low-skilled workers from the Survey of Income and Program Participation (SIPP), I estimate a dynamic model of individual labor supply and migration decisions. The model incorporates a reduced-form search model and allows for migration for non-market reasons. My estimates show that moving costs are substantial and that labor market frictions primarily inhibit migration of the employed. I use the model to study migration responses to local labor market shocks and to a moving subsidy. Workers' preferences for non-market amenities, coupled with substantial moving costs and employment frictions, grant market power to incumbent employers. Large moving costs also likely affect employers' recruiting behavior.

Suggested Citation

  • Ransom, Tyler, 2019. "Labor Market Frictions and Moving Costs of the Employed and Unemployed," IZA Discussion Papers 12139, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12139
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    Cited by:

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    2. Ashenfelter, Orley & Jurajda, Štepán, 2024. "The U.S. Low-Wage Structure: A McWage Comparison," IZA Discussion Papers 17142, Institute of Labor Economics (IZA).
    3. 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.
    4. Kalouptsidi, Myrto & Scott, Paul T. & Souza-Rodrigues, Eduardo, 2021. "Linear IV regression estimators for structural dynamic discrete choice models," Journal of Econometrics, Elsevier, vol. 222(1), pages 778-804.
    5. Jun Yeong Lee & John V. Winters, 2024. "Too Cold to Venture There? January Temperature and Immigrant Self-Employment Across the United States," Economic Development Quarterly, , vol. 38(4), pages 249-270, November.
    6. Yu, Fan & Zheng, Shilin & Zheng, Shuhong & Guo, Chenhao, 2024. "Does carbon ETS affect the distribution of labor's slice of the factor income pie? From the low carbon transition perspective," Energy Economics, Elsevier, vol. 134(C).
    7. Anna Sokolova & Todd Sorensen, 2021. "Monopsony in Labor Markets: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 74(1), pages 27-55, January.
    8. Koşar, Gizem & Ransom, Tyler & van der Klaauw, Wilbert, 2022. "Understanding migration aversion using elicited counterfactual choice probabilities," Journal of Econometrics, Elsevier, vol. 231(1), pages 123-147.
    9. Hervé, Justine, 2023. "Specialists or generalists? Cross-industry mobility and wages," Labour Economics, Elsevier, vol. 84(C).
    10. Luan, Mengna & Tao, Zhigang & Yuan, Hongjie, 2023. "Monopsony power and workers’ switching costs: Evidence from hospitals in China," Economics Letters, Elsevier, vol. 233(C).
    11. Riley Wilson, 2023. "The Isolated States of America: Home State Bias and the Impact of State Borders on Mobility," CESifo Working Paper Series 10724, CESifo.
    12. Myongjin Kim & Qi Ge & Donggeun Kim, 2021. "Mergers and labor market outcomes in the US airline industry," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 849-866, October.
    13. Myrto Kalouptsidi & Paul T. Scott & Eduardo Souza-Rodrigues, 2020. "Linear IV Regression Estimators for Structural Dynamic Discrete Choice Models," Working Papers tecipa-674, University of Toronto, Department of Economics.
    14. Berger, David & Hasenzagl, Thomas & Herkenhoff, Kyle & Mongey, Simon & Posner, Eric A., 2023. "Comments on the 2023 Draft Merger Guidelines: A Labor Market Perspective," IZA Discussion Papers 16401, Institute of Labor Economics (IZA).
    15. repec:rre:publsh:v:52:y:2022:i:2 is not listed on IDEAS
    16. Tyler Ransom, 2021. "Selective Migration, Occupational Choice, and the Wage Returns to College Majors," Annals of Economics and Statistics, GENES, issue 142, pages 45-110.
    17. Joanna Venator, 2022. "Dual-Earner Migration Decisions, Earnings, and Unemployment Insurance," Boston College Working Papers in Economics 1052, Boston College Department of Economics.
    18. Sharon Traiberman, 2019. "Occupations and Import Competition: Evidence from Denmark," American Economic Review, American Economic Association, vol. 109(12), pages 4260-4301, December.
    19. Gendron-Carrier, Nicolas, 2023. "Prior Work Experience and Entrepreneurship: The Careers of Young Entrepreneurs," IZA Discussion Papers 16145, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    migration; job search; dynamic discrete choice;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • 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
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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