Salvatore Lo Bello (Bank of Italy)
Gaetano Basso, Alessandro Cerusico and Iacopo Morchio
This paper examines the interplay between labour market transitions and geographical mobility, emphasizing worker heterogeneity. Using detailed administrative data from Italy, we document substantial variation in employment and mobility patterns across worker types, classified using a clustering algorithm. Workers with stable careers exhibit low geographical mobility, while those with discontinuous work histories move more frequently. We develop an equilibrium model integrating directed search and endogenous relocation, capturing the dynamic interactions between labour market outcomes and geographic transitions. The model highlights the role of heterogeneity in shaping responses to local and aggregate shocks, offering insights into the design of location-specific labor market policies.