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Agglomeration, Congestion, and Regional Unemployment Disparities

Ulrich Zierahn

No 201106, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth.

Keywords: regional unemployment; New Economic Geography; core-periphery; wage curve; labor migration (search for similar items in EconPapers)
JEL-codes: J64 R12 R23 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011
New Economics Papers: this item is included in nep-geo, nep-lab, nep-mig and nep-ure
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http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/06-2011_zierahn.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: Agglomeration, congestion, and regional unemployment disparities (2013) Downloads
Working Paper: Agglomeration, Congestion, and Regional Unemployment Disparities (2011) Downloads
Working Paper: Agglomeration, congestion, and regional unemployment disparities (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201106

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