A Dynamic Empirical Model of Frictional Spatial Job Search

Abstract

What explains the within-country spatial mobility of workers? We develop a unifying theoretical framework to quantify the barriers to mobility as well as the benefits of migrating. The framework incorporates life-cycle migration decisions into an equilibrium job search model. Using French administrative individual-level job transition and wage data for the structural estimation, we show that spatial search frictions empirically outweigh direct mobility costs. Both costs are increasing in age, while the worker’s net present welfare gain to spatial and labor market mobility is “hump-shaped”, peaking before the age of 50. We then quantify the general equilibrium effect of counterfactual policy interventions such as place- or aged-based policies and document the resulting gains and losses in terms of spatial and generation inequality.

Keywords: search frictions, location choice, local labor markets, life cycle

JEL Classification: J31, J61, J64, R23