Forschungsinstitut zur Zukunft der Arbeit / Institute for the Study of Labor
Abstract
In this paper, we attempt to understand the determinants of mobility by introducing the
concept of local social capital. Investing in local ties is rational when workers anticipate that
they will not move to another region. Reciprocally, once local social capital is accumulated,
incentives to move are reduced. Our model illustrates several types of complementarity
leading to multiple equilibria (a world of local social capital and low mobility vs. a world of low
social capital and high propensity to move). It also shows that local social capital is
systematically negative for mobility, and can be negative for employment, but some other
types of social capital can actually raise employment