30 Dec 2016, Mimeo, University of Geneva

Labor adjustments across sectors and regions

Working paper by Marcio Cruz, Emmanuel Milet, Marcelo Olarreaga

Abstract: This paper estimates mobility costs of workers across sectors and regions in a very large sample of developing countries. We develop a new methodology that uses cross-sectional data only. This is motivated by the fact that panel data is typically not available for most developing countries. Results suggest that on average sector mobility costs are higher than regional mobility costs. The costs of moving both sector and region are higher than the costs of moving only sector or only region. In poorer countries workers face higher mobility costs. We also provide evidence suggesting that mobility costs are partially driven by information asymmetries and access to Internet can mitigate these costs.

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