This paper develops a model of sectoral labor mobility and tests its main
implications. The model nests two distinct hypotheses on the origin of
mobility: (a) sectoral shocks (Lucas and Prescott, 1974) and (b) workeremployer
mismatch (Jovanovic, 1979, Miller, 1984, Flinn, 1986). We estimate
the relative importance of each hypothesis, and find that the bulk of labor
mobility is caused by mismatch rather than by sectoral shift. We then try to
put a value on society's match-specific information. That is, we ask to what
extent the availability of the option to change jobs raises GNP. We find that
the mobility option raises expected earnings by roughly between 8.5 percent and
13 percent of labor earnings, which translates to an increase in GNP of between
6 percent and 9 percent.
*Published:
Journal of Political Economy, Vol.98, No.4, pp. 827-852, (August 1990).
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