Geography, Migrations and Equilibrium Unemployment
Centro Studi Luca d'Agliano, Queen Elizabeth House Development Studies Working Paper No. 156
25 Pages Posted: 16 Jan 2002
Date Written: November 2001
Abstract
We study the effects of trade integration on the regional coevolution of income, migrations and unemployment in a dynamic coreperiphery model with limited labor mobility and frictions in the job matching process. Our model can help explain a recently documented empirical puzzle, i.e., the divergence of unemployment rates, together with low migrations and modest income convergence experienced by European regions over the last twenty years. By studying explicitly the transitional dynamics of the model, we also highlight a contrast between short run and long run effects of trade and policy shocks on a geographically differentiated economy.
Keywords: Integration, Agglomeration, Regional unemployment, Europe
JEL Classification: F12, F15, F16
Suggested Citation: Suggested Citation
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