Spatial equilibrium with unemployment and wage bargaining: Theory and estimation

Paul Beaudry, David Green and Benjamin Sand ()

Journal of Urban Economics, 2014, vol. 79, issue C, 2-19

Abstract: In this paper, we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labor markets. Because of the frictions, firms and workers find themselves in bilateral monopoly positions when determining wages. Although workers are not at each instant perfectly mobile across cities, in the baseline model we assume that workers flows are sufficient to equate expected utility across markets. We use the model to explore the joint determination of wages, unemployment, house prices and city size (or migration). A key role of the model is to clarify conditions under which this type of spatial equilibrium setup can be estimated. We then use U.S. data over the period 1970–2007 to explore the fit and quantitative properties of the model. Our main goal is to highlight forces that influence spatial equilibria at 10-year intervals.

Keywords: Spatial steady state; Unemployment; Bargaining; Agglomeration (search for similar items in EconPapers)
JEL-codes: E24 J31 J61 R13 R15 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (59)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0094119013000788
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Spatial Equilibrium with Unemployment and Wage Bargaining: Theory and Estimation (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:79:y:2014:i:c:p:2-19

DOI: 10.1016/j.jue.2013.08.005

Access Statistics for this article

Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange

More articles in Journal of Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().