Search Unemployment and New Economic Geography

Philipp vom Berge

No 454, University of Regensburg Working Papers in Business, Economics and Management Information Systems from University of Regensburg, Department of Economics

Abstract: This paper develops a general equilibrium geographical economics model which uses matching frictions on the labor market to generate regional unemployment disparities alongside the usual core-periphery pattern of industrial agglomeration. In the model, regional wage differentials do not only influence migration decisions of mobile workers, but also affect the bargaining process on local labor markets, leading to differences in vacancies and unemployment as well. In a setting with two regions, both higher or lower unemployment rates in the core region are possible equilibrium outcomes, depending on transport costs and the elasticity of substitution. Stylized facts suggest that both patterns are of empirical relevance.

Keywords: Regional labor markets; New Economic Geography; job matching; unemployment (search for similar items in EconPapers)
JEL-codes: F12 J61 J64 R12 (search for similar items in EconPapers)
Date: 2011-03-28
New Economics Papers: this item is included in nep-dge, nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bay:rdwiwi:20304

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