2004 Fiscal Year Final Research Report Summary
Theoretical and empirical studies on the labor migration dynamics under uncertainty
| Project/Area Number |
15530164
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Applied economics
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| Research Institution | Keio University |
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Principal Investigator |
AKABAYASHI Hideo Keio University, Faculty of Economics, Associate Professor, 経済学部, 助教授 (90296731)
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| Co-Investigator(Kenkyū-buntansha) |
FUJITA Yasunori Keio University, Faculty of Economics, Associate Professor, 経済学部, 助教授 (40265939)
ATSUJI Atsushi Keio University, Faculty of Economics, Professor, 経済学部, 教授 (00221044)
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| Project Period (FY) |
2003 – 2004
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| Keywords | Labor Migration / Option Theory / General Equilibrium |
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| Research Abstract |
We study a stochastic equilibrium model of labor migration and urban wage dynamics in a competitive market when migration incurs irreversible costs that differ among workers. Each worker chooses an optimal threshold wage at which he enters the urban labor market, taking into account the future wage dynamics that depends on the future supply of migrant workers and the exogenous product price process.
We solve our problem by calculating the optimization problem by a direct integration on a two-dimensional Markov process of the product price and the past highest product price. Then, we can directly obtain an expression for the equilibrium wage process. Therefore, one technical contribution is that it proposes an analytical method to solve a class of problems that explicitly incorporate the continuous heterogeneity of investment costs and the endogenous change in the underlying(asset) price processes. Under the standard setting, we find that the threshold wage level does not depend on the distribution of costs in the population, the variability of wages is smaller than that of product price depending upon the distribution of costs, and the variability of product price does not necessarily accelerate or discourage the flow of migrants.
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