DP19209 Labour mobility costs across sectors and regions in a cross-section: How old is the captain?
We estimate the mobility costs of workers across sectors and regions in a large sample of developing countries. We develop a new methodology that uses cross-sectional data only. This is motivated by panel data being typically unavailable for developing countries. Our main identifying assumption for the labour mobility costs is that the age of the worker, or rather the time to retirement, is an important determinant of whether it is profitable to change jobs. We estimate the median sector mobility cost to be 0.77 times workers’ annual labour income, the median region mobility cost to be 0.49 times workers’ annual income, and the median cost of moving both sector and region to be 0.98 times workers’ annual income. Women face higher mobility costs. The median welfare gains from removing sector, region, and sector/region mobility costs are estimated at 3, 2, and 5 per cent of real annual wages, respectively.
