Equilibrium Urban Unemployment

Etienne Wasmer and Yves Zenou

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We introduce a spatial dimension in a search equilibrium unemployment model. By assuming that workers' search efficiency decreases with the distance to the employment centre, two urban equilibrium configurations emerge: either the unemployed reside close to the employment centre or far away from it, depending on the values of the commuting costs and of the surplus associated with search, which depends on the labor market equilibrium. The labor market equilibrium itself depends crucially on these urban equilibria. We show that the unemployment level is lower in the first urban equilibrium.

Date: 1997-10
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Working Paper: Equilibrium Urban Unemployment (1997)
Working Paper: Equilibrium Urban Unemployment (1997)
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