TY - JOUR
T1 - A positive theory of geographic mobility and social insurance
AU - Hassler, John
AU - Mora RodríGuez, José V.
AU - Storesletten, Kjetil
AU - Zilibotti, Fabrizio
PY - 2005/2
Y1 - 2005/2
N2 - This article presents a tractable dynamic general equilibrium model explaining cross-country data on geographical mobility, unemployment, and labor market institutions. Rational forward-looking agents vote on unemployment insurance (UI). Agents with higher moving costs (larger attachment to their location) prefer more generous UI. Attachment is assumed to increase with the duration of residence. UI mitigates incentives for moving and increases, therefore, the fraction of attached agents and the political support for UI. This self-reinforcing mechanism can yield two steady-states: one "European" and one "American." The former (latter) features high (low) unemployment, low (high) geographical mobility, and high (low) UI.
AB - This article presents a tractable dynamic general equilibrium model explaining cross-country data on geographical mobility, unemployment, and labor market institutions. Rational forward-looking agents vote on unemployment insurance (UI). Agents with higher moving costs (larger attachment to their location) prefer more generous UI. Attachment is assumed to increase with the duration of residence. UI mitigates incentives for moving and increases, therefore, the fraction of attached agents and the political support for UI. This self-reinforcing mechanism can yield two steady-states: one "European" and one "American." The former (latter) features high (low) unemployment, low (high) geographical mobility, and high (low) UI.
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U2 - 10.1111/j.0020-6598.2005.00318.x
DO - 10.1111/j.0020-6598.2005.00318.x
M3 - Article
AN - SCOPUS:27744437842
SN - 0020-6598
VL - 46
SP - 263
EP - 303
JO - International Economic Review
JF - International Economic Review
IS - 1
ER -