Internal Migration in Dual Labor Markets

Abstract

This paper uses a large panel assembled from Spanish administrative data for over one million individuals assembled from tax, welfare and employment records over a period spanning 30 years to estimate a dynamic model of individual optimization that explains transitions and spell lengths between permanent positions, temporary positions, unemployment and exits from the workforce. We seek to explain the sequence of job spells in temporary contracts and unemployment transitions as new entrants in the workforce gradually acquire experience and, ultimately, transition into permanent contracts. The career mobility of young workers is jointly determined with geographical and occupational mobility. Thus we investigate how different types of labor market experience and welfare entitlements affect job search behavior, employment duration, andmigration patterns over the life cycle.