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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.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 102 (1992)
Issue (Month): 411 (March)
Pages: 366-77

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Handle: RePEc:ecj:econjl:v:102:y:1992:i:411:p:366-77

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Cited by:
  1. Patacchini, Eleonora & Zenou, Yves, 2003. "Search Intensity, Cost of Living and Local Labour Markets in Britain," CEPR Discussion Papers 3722, C.E.P.R. Discussion Papers.
  2. Patacchini, Eleonora & Zenou, Yves, 2003. "Search Activities, Cost of Living and Local Labor Markets," Working Paper Series 607, Research Institute of Industrial Economics.
  3. 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.

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