یکپارچگی اقتصادی و موسسات بازار کار : تحرک کارگری، ریسک درآمد و ساختار قرارداد

This paper investigates the effects of labor market integration, in the form of worker mobility, in a model with long-term labor contracts that lead to wage rigidities and unemployment. Reflecting the interdependence of regional labor markets, we develop a framework where the contract structure is simultaneously determined in all regions. It is shown that increased mobility leads to more flexible labor market institutions in which firms can more easily vary the level of employment in response to fluctuations in demand. Economic integration is potentially Pareto-improving but, in the absence of a system of compensation, workers are harmed by greater labor mobility while the owners of firms benefit from higher profits.

It has become commonplace for analysts (e.g., Burda and Mertens (1995) or Bertola and Ichino (1995)) to draw a sharp distinction between flexible “US-style” and rigid “European-style” labor market institutions, in which the former are characterized by relatively little regulatory control, high interregional and intersectoral mobility of labor, and wage flexibility, while the latter exhibit strong regulatory constraints, collective bargaining arrangements that limit the ability of firms to adjust employment and wages in the face of changing market conditions, and relatively limited intersectoral and interregional mobility of labor.1 Some of these institutional features are determined as a matter of public policy while others are more “fundamental” in the sense that they depend on underlying “technological” determinants. In this paper, we focus on the cost of migration as a fundamental determinant of labor market institutions, including labor market policies.

The preceding analysis has investigated the consequences of changes in the extent of labor market integration when labor markets are not necessarily characterized by full employment in all circumstances. As we have seen, changes in labor mobility alter long-term employment relationships, and thus observed wages and levels of employment in different states of the world. These contracts are part of the institutional structure of labor markets, implemented not only through purely private arrangements between firms and workers but also through public policies such as labor market regulations. Thus, in exploring the dependence of equilibrium contract structures on the “technology” of labor mobility, as represented by a migration cost parameter c, our analysis sheds light on the determinants and evolution of institutional structure.