Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70917
Authors: 
Grossmann, Volker
Schäfer, Andreas
Steger, Thomas M.
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Universität Leipzig, Wirtschaftswissenschaftliche Fakultät 116
Abstract: 
We investigate the effects of interregional labor market integration in a twosector,overlapping-generations model with land-intensive production in the nontradable goods sector (housing). To capture the response to migration on housing supply, capital formation is endogenous, assuming that firms face capital adjustment costs. Our analysis highlights heterogeneous welfare effects of labor mark etintegration. Whereas individuals without residential property lose from immigration due to increased housing costs, landowners may win. Moreover, we show how the relationship between migration and capital formation depends on initial conditions at the time of labor market integration. Our model is also capable to explain the reversal of migration during the transition to the steady state, like observed in East Germany after unification in 1990. It is also consistent with a gradually rising migration stock and house prices in high-productivity countries like Switzerland.
Subjects: 
Capital formation
House prices
Land distribution
Migration
Welfare
JEL: 
D90
F20
O10
Document Type: 
Working Paper

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