Search, Wage Posting, and Urban Spatial Structure

Yves Zenou

No 3339, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We develop an urban-search model in which firms post wages. When all workers are identical, the Diamond paradox holds, i.e. there is a unique wage in equilibrium even in the presence of search and spatial frictions. This wage is affected by spatial and labor costs. When workers differ according to the value imputed to leisure, we show that, under some conditions, two wages emerge in equilibrium. The commuting cost affects the land market but also the labor market through wages. Workers’ productivity also affects housing prices and this impact can be positive or negative depending on the location in the city. One important aspect of our model is that, even with positive search costs, wage dispersion prevails in equilibrium, a feature not possible in the non-spatial model.

Keywords: diamond paradox; urban land-use; spatial compensation; search frictions; wage dispersion (search for similar items in EconPapers)
JEL-codes: D83 J64 R14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2008-02
New Economics Papers: this item is included in nep-dge, nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Journal of Economic Geography, 2011, 11 (3), 387 - 416

Downloads: (external link)
https://docs.iza.org/dp3339.pdf (application/pdf)

Related works:
Journal Article: Search, wage posting and urban spatial structure (2011)
Working Paper: Search, Wage Posting, and Urban Spatial Structure (2010)
Working Paper: Search, Wage Posting and Urban Spatial Structure (2007)
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:iza:izadps:dp3339

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().