Geographic mobility, race, and wage differentials

This paper analyzes the relationship between geographic mobility and earnin gs. We present an equilibrium search model that yields differences between the reservation wages of mobile and immobile workers. The expected wages of mobile workers exceed those of immobile workers due to partial sorting acr oss high- and low-paying firms. An extension to visibly distinct groups wit h different immobile proportions yields statistical discrimination against immobile group members. Using combined Displaced Workers Files, we find tha t mobility positively affects earnings and partially explains racial and et hnic earnings differentials. To test for statistical discrimination, we est imate separate earnings functions for union and nonunion workers. (C) 1999 Academic Press.