2006–2010

Equilibrium Search Unemployment with Explicit Spatial Frictions

Reprint No. 2006:4

Author(s): Etienne Wasmer and Yves Zenou.Year: 2006 Title: Labour Economics Volume (No.): 13 (2) Pages: 143–165


Assuming that job search efficiency decreases with distance to jobs, workers’ location in a city depends on spatial elements such as commuting costs and land prices and on labour elements such as wages and the matching technology. In the absence of moving costs, we show that there exists a unique equilibrium in which employed and unemployed workers are perfectly segregated but move at each employment transition. We investigate the interactions between the land and the labour market equilibrium and show under which condition they are interdependent. When relocation costs become positive, a new zone appears in which both the employed and the unemployed co-exist and are not mobile. We demonstrate that the size of this area goes continuously to zero when moving costs vanish. Finally, we endogeneize search effort, show that it negatively depends on distance to jobs and that long and short-term unemployed workers coexist and locate in different areas of the city.


Reference:
Wasmer, Etienne and Yves Zenou. (2006), "Equilibrium Search Unemployment with Explicit Spatial Frictions". Labour Economics 13(2), 143–165.

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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