Residential Mobility and Unemployment in the UK

In the context of Brexit and the developments within UK, this  interesting paper  by Monica Langella and Alan Manning gives a perspective on the labor market in the UK:

“One of the main forces that economists expect to equalize economic opportunity across areas is migration: individuals leaving depressed areas for booming areas. There is strong evidencethat migration does respond to differences in economic opportunity (for a thorough, though early, survey see Greenwood, 1997). The classic reference for the US is Blanchard and Katz (1992) who concluded that negative local labour demand shocks cause a short-run rise in the unemployment rate but that migration causes unemployment rates to be equalized within 5-7 years, a relatively short time. However, Amior and Manning (2018) argue that for the US the migration response over decades is slower than that estimated by Blanchard and Katz (1992) and that local demand shocks are highly persistent, causing very persistent differentials in unemployment rates. The US has also had a marked fall in residential mobility in recent years that has attracted attention (Molloy, Smith and Wozniak, 2011, 2014; Dao, Furceri, and Loungani, 2017). Similar exercises for Europe (e.g. Pissarides and McMaster, 1990; Decressin and Fatas, 1995; Overman , 2002; OECD 2005) find slower adjustment processes than in the US though Amior and Manning (2019) argue that the net migration response to unemployment in the UK is higher and more similar to the US than commonly believed. Although these studies do provide convincing evidence that migration does respond to economic opportunities, there is still surprisingly little evidence on the process in recent years (the survey of Greenwood, 1997, seems to be the most recent) and considerable gaps in our knowledge

Posted by at 10:25 AM

Labels: Inclusive Growth


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