City Structure, Job Search and Labour Discrimination. Theory and Policy Implications

Yves Zenou and Harris Selod

No 4926, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are mainly driven by the racial preferences of households. There are two possible urban equilibrium and we show that, under some reasonable conditions, all workers are better off in the equilibrium where blacks are close to jobs. We then consider two policies: affirmative action and employment subsidies to the firms that hire black workers. We show that, in cities where black workers reside far away from jobs, the optimal policy is to impose higher quotas or employment subsidies than in cities where they live close to jobs.

Keywords: Spatial mismatch; Racial preferences; Social Networks; Affirmative action; Employment subsidies (search for similar items in EconPapers)
JEL-codes: J15 J41 R14 (search for similar items in EconPapers)
Date: 2005-02
New Economics Papers: this item is included in nep-geo, nep-lab, nep-net and nep-ure
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