Efficiency Wages, Involuntary Unemployment and Urban Spatial Structure

Yves Zenou and Tony E. Smith
Additional contact information
Tony E. Smith: Regional Science Graduate Group, University of Pennsylvania, Philadelphia

No 1994076, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The labor market model is developed within an urban spatial context, where it is shown that effeciency-wage policies can lead to significant levels of involuntary unemployment. Commuting cost differences between workers and nonworkers tend to increase unemployment, and competition for land tends to segregate workers and non-workers, with nonworkers relegated to the urban fringe. These findings are extended to a two-city system, where it is shown that even with free mobility of workers, significant wage and unemployment differentials can exist between cities characterized by different levels of productivity.

Keywords: Efficiency wages; unemployment; labor markets (search for similar items in EconPapers)
JEL-codes: D21 J31 J41 (search for similar items in EconPapers)
Date: 1994-12-01
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Efficiency wages, involuntary unemployment and urban spatial structure (1995)
Working Paper: Efficiency wages, involuntary unemployment and urban spatial structure (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1994076

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