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Journal of Economic Integration 2014 June;29(2) :372-407.
DOI: https://doi.org/10.11130/jei.2014.29.2.372
Modelling Migration and Regional Labour Markets: an Application of the New Economic Geography Model RHOMOLO
Andries Brandsma
d’Artis Kancs and 
Damiaan Persyn 
European Commission, Seville, Spain
European Commission, Seville, Spain LICOS, University of Leuven, Leuven, Belgium EERI Economics and Econometrics Research Institute, Brussels, Belgium
European Commission, Seville, Spain VIVES and LICOS, University of Leuven, Leuven, Belgium
Corresponding Author: Damiaan Persyn ,Tel: +34 954487169, Fax: +34 954488300, Email: Damiaan.PERSYN@ec.europa.eu
Copyright ©2014 Journal of Economic Integration
ABSTRACT
The paper describes the dynamic spatial general equilibrium model, Regional Holistic MOdeL(RHOMOLO), developed by the European Commission, where the labour market equilibrium is determined by firms’ labour demand, unemployment and interregional labour migration. We carry out simulations on the effects of transportation costs on regional labour markets. Our results confirm that wages and unemployment are by far the most important channels of labour market adjustment in the EU. In contrast, labour migration is found to play a secondary role. Also, the complexity and spatially inter-dependent relationship among market access, labour demand, and labour supply is found. It underlines the significance of dynamic spatial general equilibrium approach.

JEL Classification
C68: Computable General Equilibrium Models
D58: Computable and Other Applied General Equilibrium Models
F22: International Migration
J20: General
J61: Geographic Labor Mobility; Immigrant Workers
J64: Unemployment: Models, Duration, Incidence, and Job SearchDB Error: unknown error