Paper #604

Títol:

A positive theory of geographic mobility and social insurance

Autors:

John Hassler, José V. Rodríguez Mora, Kjetil Storesletten i Fabrizio Zilibotti

Data:

Agost 2001

Resum:

This paper presents a tractable dynamic general equilibrium model that can explain cross-country empirical regularities in geographical mobility, unemployment and labor market institutions. Rational agents vote over unemployment insurance (UI), taking the dynamic distortionary effects of insurance on the performance of the labor market into consideration. Agents with higher cost of moving, i.e., more attached to their current location, prefer more generous UI. The key assumption is that an agent's attachment to a location increases the longer she has resided there. UI reduces the incentive for labor mobility and increases, therefore, the fraction of attached agents and the political support for UI. The main result is that this self-reinforcing mechanism can give rise to multiple steady-states-one 'European' steady-state featuring high unemployment, low geographical mobility and high unemployment insurance, and one 'American' steady-state featuring low unemployment, high mobility and low unemployment insurance.

Paraules clau:

Employment, migration, geographical mobility, political equilibrium, unemployment insurance, voting

Codis JEL:

D72, E24, J24, J64, J65

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

International Economic Review, 46 (2005), 1 (02), pp. 263-303

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