Research at ZEW Mannheim

A low level of regional labour mobility has often been associated with persistent regional disparities as well as with high levels of regional mismatch unemployment. Higher regional labour mobility may thus foster employment growth and economic growth in general. Therefore, low levels of interregional mobility among unskilled workers with a high incidence of unemployment are of particular concern. Whether people make use of interregional mobility as a means to adjust to individual employment shocks or not may partly be explained by economic incentives.This research project focuses on the microeconomic analysis of the determinants of interregional labour mobility. In particular, the project wants to unfold the relevant economic incentives for different groups of workers. As a first step, the impact of several institutional factors on the likelihood of exiting unemployment via interregional mobility is to be modelled using a search-theoretic approach. Some of the most interesting factors to be studied are the influence of local employment policies as well as other institutional factors such as the level of dismissal protection. As a next step, microeconometric analyses will be used to estimate the impact of these factors on the propensity to be mobile interregionally among various segments of the labour market.The results of this research project may then form the basis for an employment policy that takes into account its impact on the level of interregional labour mobility. Such a policy may help to raise levels of interregional mobility and thus contribute to higher levels of employment and faster convergence between regions.However, interregional mobility may also result in severe problems in the regions experiencing major outflows of young and mobile segments of the working age population. Taking into account these critical issues arising from interregional mobility will thus be an additional aspect of the research project in the medium and long run. One research question to be studied in this context are the individual as compared to the social returns to and costs of mobility.