Employment Status, Endogenous Regional Mobility, and Spatial Dependencies in Labor Markets

30 Pages Posted: 26 Jul 2002

See all articles by Rene Fahr

Rene Fahr

University of Paderborn; IZA Institute of Labor Economics

Uwe Sunde

Ludwig Maximilian University of Munich

Date Written: June 2002

Abstract

This paper investigates spatial correlation in the matching process of vacant jobs and job seekers. The importance of the interactions of regional labor markets in West Germany is highlighted in several dimensions. We test for spatial autocorrelation in regional hires, unemployment and vacancy levels, we examine the patterns of new matches in regions, identify clusters of regions of particularly intense interregional matching, and examine the effects of German re-unification. After setting-out a simple model of endogenous regional mobility and endogenous on-the-job search, we analyze the composition of new hires with respect to regional origin and previous employment status, the determinants of this composition, and the interaction of these characteristics. The results shed new light on the puzzle raised in the literature, which finds a large variation in unemployment rates, combined with little inter-regional migration. We find evidence in favor of labor market determined migration and against the "internal migration puzzle" found for other European countries and partly for the United States.

Keywords: Internal Migration, On-the-job Search, Job Competition, Composition of Hires, Unemployment

JEL Classification: J61, J64, J21, R12

Suggested Citation

Fahr, Rene and Sunde, Uwe, Employment Status, Endogenous Regional Mobility, and Spatial Dependencies in Labor Markets (June 2002). IZA Discussion Paper No. 521. Available at SSRN: https://ssrn.com/abstract=320100

Rene Fahr

University of Paderborn ( email )

Warburger Str. 100
D-33098 Paderborn
Germany
+49 5251 60 3692 (Phone)

HOME PAGE: http://www.quantitative-cg.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 38 94 0 (Phone)
+49 228 38 94 510 (Fax)

Uwe Sunde (Contact Author)

Ludwig Maximilian University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

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