The ability of workers to transition toa new job is crucial to determine the resilience of aneconomy to (positive or negative) shocks. This paperprovides new evidence on the factors that affect labormobility by using labor data on Indonesia, one of countrieswith the higher estimated labor mobility costs. To do so itinvestigates correlates of the probability of an individualfinding a job after a negative labor market shock, as wellas of the duration of job search. The results show thathigher housing prices are associated with higher mobilitycosts, suggesting that housing benefits or policies thatincrease the supply of housing may help reduce mobilitycosts in Indonesia. More generally, public expenditure oninfrastructure seems to reduce labor mobility costs,particularly in urban areas, consistently with a reductionin transaction costs – such as urban transport. The resultsalso highlight that formal institutional mechanisms such asjob advertisements do not appear to work effectively to helplabor mobility in Indonesia, suggesting the need to re-thinkactive labor market policies. On the other hand, minimumwage level – a key outcome of labor market policy - does notappear to affect labor mobility. Labor mobility costs seemhigher in urban areas, which could indicate a loweropportunity cost of joblessness than in rural area,employment composition skewed towards sectors with highermobility costs and/or large congestion costs that negativelyaffect labor mobility. On the other hand, the general femalepenalty in labor mobility is less accentuated in urbanareas, which may be the result of sectoral compositionand/or less discriminatory cultural norms than in rural areas.
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