Dual Labour Markets, Urban Unemployment and Multicentric Cities

Tony E Smith and Yves Zenou

No 1566, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper a two-sector model of urban unemployment is developed which focuses on the formation of a secondary sector under conditions in which a demand shock in the primary sector leads to a sharp increase in unemployment. The optimal location in the secondary sector is shown to be at the edge of the city, giving rise to a multicentric urban spatial structure. Within this spatial structure, we establish conditions under which the new labour market equilibrium involves not only a decrease in unemployment, but also an increase in net income for those unemployed. These results are extended to the case in which all unemployment benefits are financed by local taxation of firms. In this context, it is shown that when taxation discourages entry of a secondary sector, there may be profit incentives for the primary sector to subsidize the entry of a secondary sector.

Keywords: Edge City; Effciciency Wage; Location Taxation; Minimum Wage (search for similar items in EconPapers)
JEL-codes: J41 R14 (search for similar items in EconPapers)
Date: 1997-01
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1566 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Dual Labor Markets, Urban Unemployment, and Multicentric Cities (1997)
Working Paper: Dual labor markets, urban unemployment, and multicentric cities (1997)
Working Paper: Dual Labor Markets, Urban Unemployment and Multicentric Cities (1996)
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:cpr:ceprdp:1566

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1566

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().