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Title:Housing and the labor market: time to move and aggregate unemployment PDF Logo
Authors:Rupert, Peter
Wasmer, Etienne
Issue Date:2009
Series/Report no.:IZA discussion papers 4172
Abstract:The Mortensen-Pissarides model with unemployment benefits and taxes has been able to account for the variation in unemployment rates across countries but does not explain why geographical mobility is very low in some countries (on average, three times lower in Europe than in the U.S.). We build a model in which both unemployment and mobility rates are endogenous. Our findings indicate that an increase in unemployment benefits and in taxes does not generate a strong decline in mobility and accounts for only half to two-thirds of the difference in unemployment from the US to Europe. We find that with higher commuting costs the effect of housing frictions plays a large role and can generate a substantial decline in mobility. We show that such frictions can account for the differences in unemployment and mobility between the US and Europe.
Subjects:Unemployment
housing market imperfections
labor search frictions
commuting costs
JEL:J30
J60
R20
Persistent Identifier of the first edition:urn:nbn:de:101:1-2009060842
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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