Migration equilibria disequilibria and the natural rate of unemployment in a regional context

In this article, we examine, in an explicitly system-wide context, the theory of regional equilibria in the presence of endogenous migration of the form specified in Layard et al. (1991) and Treyz et al. (1993), where net migration flows (relative to lagged labour force) are determined by real consumption wage and unemployment-rate differentials. Accordingly, we provide a theoretical analysis of the importance of both market-clearing and steady-state concepts of equilibrium for the regional labour market. In particular, we examine the impact of a stimulus to local demand, in the form of an injection of externally financed government expenditure. We focus on short- and 1ong-run comparative static equilibria and the adjustment paths which link them. Some issues are dealt with analytically, while others require simulation.