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A Model of Regional Contraction and Unemployment

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  • McCormick, Barry
  • Sheppard, Stephen

Abstract

A two-region economy is studied in which one region has a competitive labor market whereas the other has a congested labor market in which locating a job uses resources. Workers loosing jobs in the congested region choose between migration followed by an immediate job offer and searching in the congested region. Steady-state decline of the labor force in the congested region is characterized together with equilibrium unemployment rates. Higher unemployment benefits may increase the rate of contraction of the congested market if the consequence for job matching outweighs that for migration conditional upon a given level of unemployment. Copyright 1992 by Royal Economic Society.

Suggested Citation

  • McCormick, Barry & Sheppard, Stephen, 1992. "A Model of Regional Contraction and Unemployment," Economic Journal, Royal Economic Society, vol. 102(411), pages 366-377, March.
    • Handle: RePEc:ecj:econjl:v:102:y:1992:i:411:p:366-77
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    Cited by:

    1. David Gray, 2005. "An examination of regional interaction and super-regions in Britain: An error correction model approach," Regional Studies, Taylor & Francis Journals, vol. 39(5), pages 619-632.
    2. Semerikova, Elena, 2014. "Unemployment in East and West Germany: Spatial panel data analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 35(3), pages 107-132.
    3. Murray, Emily T. & Zaninotto, Paola & Fleischmann, Maria & Stafford, Mai & Carr, Ewan & Shelton, Nicola & Stansfeld, Stephen & Kuh, Diana & Head, Jenny, 2019. "Linking local labour market conditions across the life course to retirement age: Pathways of health, employment status, occupational class and educational achievement, using 60 years of the 1946 Briti," Social Science & Medicine, Elsevier, vol. 226(C), pages 113-122.
    4. Sarantis LOLOS & Evangelia PAPAPETROU, 2012. "Unemployment disparities and persistence Assessing the evidence from Greek regions, 1981-2008," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(1), pages 69-90.
    5. Lisa Morris Grobar, 1996. "Comparing The New England And Southern California Regional Recessions," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 71-84, July.
    6. Patacchini, Eleonora & Zenou, Yves, 2006. "Search activities, cost of living and local labor markets," Regional Science and Urban Economics, Elsevier, vol. 36(2), pages 227-248, March.
    7. Zenou, Yves & Patacchini, Eleonora, 2003. "Search Intensity, Cost of Living and Local Labour Markets in Britain," CEPR Discussion Papers 3722, C.E.P.R. Discussion Papers.
    8. Molho, Ian, 2001. "Spatial Search, Migration and Regional Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 269-283, May.
    9. Dr. Khalid Anwar, 2007. "Impact of Rural-Urban Migration on Income (Case Study of Selected Large & Medium Scale Industries)," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 2(2), pages 35-42, October.

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