Job mobility offers opportunities for workers to obtain wage increases, but returns to job changes differ considerably. Reichelt argues that parts of this inequality result from a trade-off between occupational and regional mobility. Both mobility types offer alternative strategies to improve one’s labor market position; however, they each contain unique restrictions. High costs for regional mobility can thus evoke occupation changes, even though the resulting human capital devaluation leads to lower wage increases. Reichelt uses linked retrospective life-course data for Germany (ALWA-ADIAB) and applies competing risks models to show that restrictions on one type of mobility drive individuals toward the other. Using fixed-effects regressions, Reichelt shows that occupational mobility leads to lower wage increases compared to regional mobility. Reichelt concludes that the trade-off between occupational and regional mobility explains part of the differential returns to job mobility and contributes to wage inequality. Reichelt expects these mechanisms to become more pronounced in the future as technological and institutional changes alter job requirements and thereby mobility incentives.

 

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