A labour-markets model is constructed in which migration may exhibit 'distance deterrence' and 'cumulative inertia'. (Migration probabilities fall with distance and length of residence, respectively.) The combination of these two processes yields higher equilibrium unemployment rates in remote areas. Fewer out-migration opportunities in remote areas generate longer residence durations which become self-perpetuating (via cumulative inertia). Such areas accu- mulate net in-migrants until the local unemployment rate rises sufficiently to balance inflows and outflows. In equilibrium, local unemployment rates compensate for (endogenous) varia- tions in residence duration. Some evidence is presented for Britain which supports the pre- diction of higher unemployment in remote areas. inertia (or negative duration dependence) and distance deterrence in migration behaviour generates higher equilibrium unemployment rates in remote areas, all other things being equal. Cumulative inertia reflects a process whereby individuals form attachments to area, friends, job, etc., which grow over time. Distance deterrence arises because of increasing movement costs over longer distances, and friction in information flows about relevant opportunities. Both processes are intuitively plausible and have been tested empirically.' Clearly, both issues are likely to affect adjustment patterns in the face of shocks to labour markets. The argument advanced in this paper, however, and one that is perhaps not quite so obvious, is that the combination of the two processes can also affect the underlying equilibrium itself. The existence of persistent spatial differentials in unemployment is charac- teristic of most countries, and would appear to motivate areas of government policy. Various explanations for such differentials have been proposed. The analysis presented here is intended primarily to deepen our understanding of the causes of these sustained differentials, and hence to inform policy. Traditional explanations for sustained local unemployment differentials may be divided into three types. One argument is in terms simply of labour immobility-the perceived costs of moving outweigh the benefits, and hence labour market imbalances persist. Alternatively, one may combine mobile lab- our with spatial wage rigidities, such that equilibrium local unemployment patterns 'compensate' for local variation in wages and other exogenous factors (climate, environment, etc.) in people's preference functions. Finally, there is the issue of labour heterogeneity, e.g. by occupation; a 'compensating varia- tions' equilibrium may exist for each homogeneous class of labour, such that a region's aggregate unemployment rate reflects the local composition of
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