Regional Labor Mobility in Finland

November 29, 2018

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Format: Chicago

Tigran Poghosyan. Regional Labor Mobility in Finland, (USA: International Monetary Fund, 2018) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper analyzes regional labor mobility in Finland using two complementary empirical approaches: a VAR proposed by Blanchard and Katz (1992) and a gravity model. The results point to a relatively limited regional labor mobility in Finland compared to the U.S. and to EU peers. The limited regional labor mobility is associated with persistent unemployment differentials across regions. Some impediments to regional labor mobility are exogenous, such as large geographical distances across regions and relatively sparse population density, and explain about 23 percent of the variation in labor mobility. Others can be influenced by policy, such as further increase in wage flexibiltiy and reduction of housing costs. These impediments explain about 60 percent of the variation in labor mobility. Greater regional labor mobility could help reduce regional unemployment differentials, improve job matching efficiency, and remove pressures from regional fiscal redistribution.

Subject: Labor, Labor force participation, Labor mobility, Population and demographics, Unemployment, Unemployment rate

Keywords: Australia and New Zealand, Bargaining centralization, Decentralized wage, Europe, Finland, Global, Gravity model, IMF staff calculation, Labor force participation, Labor mobility, Labor mobility, Regional labor mobility, Unemployment, Unemployment rate, Wage response, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/252
Stock No:

WPIEA2018252
ISBN:

9781484385685
ISSN:

1018-5941

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