Housing and the labor market: Time to move and aggregate unemployment

Peter Rupert, Etienne Wasmer

Research output: Contribution to journalArticlepeer-review

Abstract

Conventional macro-search models (Mortensen and Pissarides) with unemployment benefits and taxes have been able to account for the variation in unemployment rates across countries but do not account for the role geographic mobility or commuting time might play. 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 but does increase unemployment as in the standard model. We find that with higher commuting costs the effect of housing frictions plays a large role and can generate a substantial decline in mobility.

Original languageEnglish (US)
Pages (from-to)24-36
Number of pages13
JournalJournal of Monetary Economics
Volume59
Issue number1
DOIs
StatePublished - Jan 2012

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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