Regional reallocation and housing markets in a model of frictional migration
Journal article, Peer reviewed
Date
2015Metadata
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- Scientific articles [1334]
Abstract
Migration frictions are important for understanding key features of gross migra-
tion and housing markets. This paper studies a multi-region equilibrium model with
frictional migration. Idiosyncratic preference shocks, a mobility cost, and imperfectly
directed migration lead to slow worker reallocation in response to changes in local
conditions. This leads to a dependence of local house prices on the history of labor
market shocks. The model accounts for the comovements of unemployment and rental
and house prices with gross migration observed in a panel of U.S. cities. Structural
estimation reveals a high mobility cost for unemployed workers and a low probability
of directed migration. Both of these imply that regional reallocation has a limited
importance for the aggregate labor market and that the e ects of housing markets on
reallocation are small.
Description
This is the author's accepted and refereed manuscript of the article