Paper #832

Title:

Trade, migration and regional unemployment

Authors:

Paolo Epifani and Gino Gancia

Date:

March 2002 (Revised: November 2003)

Abstract:

We formulate a dynamic core-periphery model with frictions in the job matching process to study the interplay between trade costs, migration and regional unemploymentin the short- and long-run. We find that the spatial distribution of unemployment mirrors (inversely) the distribution of economic activities. Further, we highlight a contrast between the short-run and the long-run effects of trade-induced migration on regional unemployment. In particular, an inßow of immigrants from the periphery into the core reduces the unemployment gap in the short-run, but exacerbates unemployment disparities in the long-run.

Keywords:

Integration, Agglomeration, Search frictions, Labor mobility, Regional disparities

JEL codes:

F12, F15, F16

Area of Research:

Macroeconomics and International Economics

Published in:

Regional Science and Urban Economics 35, 625-644, 2005

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