Frictional Labor Mobility

We build a dynamic model of migration where, in addition to classical mobility costs, workers face informational frictions that decrease their ability to compete for distant job opportunities. We structurally estimate the model on a matched employer-employee panel dataset describing labor market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of accepted wages. We find that after controlling for frictions, mobility costs are one order of magnitude lower than previously reported in the literature and their effect on labor mobility and unemployment is significantly lower than the effect of informational frictions.