combined with IZA DP 925 published in: Review of Economics of the Household, 2010, 8 (1), 105–146
This paper formulates a partial search model in which unemployed individuals simultaneously
search for job and location of residence. Most importantly, we show that, ceteris paribus, a
decrease in current place utility increases the transition rate into a new location of residence
and the transition rate into employment outside the local labour market, but decreases the
transition rate into local employment. Thus, a decrease in current place utility decreases the
overall job-finding rate if the local reservation wage effect dominates. We argue that dispersal
policies on refugee immigrants are characterized by low average values of current place
utility. Hence, the model predicts that dispersal policies increase the geographical mobility
rates of refugees and, for a sufficiently large local reservation wage effect, decrease their jobfinding
rates.
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