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Search unemployment and new economic geography

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  • Philipp vom Berge

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    Abstract

    This paper develops a general equilibrium geographical economics model, which uses matching frictions on the labor market to generate regional unemployment disparities alongside the usual core-periphery pattern of industrial agglomeration. In the model, regional wage differentials do not only influence migration decisions of mobile workers, but also affect the bargaining process on local labor markets, leading to differences in vacancies and unemployment as well. In a setting with two regions, both higher or lower unemployment rates in the core region are possible equilibrium outcomes, depending on transport costs and the elasticity of substitution. Stylized facts suggest that both patterns are of empirical relevance. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s00168-012-0535-z
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    Bibliographic Info

    Article provided by Springer in its journal The Annals of Regional Science.

    Volume (Year): 50 (2013)
    Issue (Month): 3 (June)
    Pages: 731-751

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    Handle: RePEc:spr:anresc:v:50:y:2013:i:3:p:731-751

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    Related research

    Keywords: F12; J61; J64; R12;

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    1. Matusz, Steven J, 1996. "International Trade, the Division of Labor, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 71-84, February.
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    3. Steven Brakman & Harry Garretsen & Marc Schramm, 2004. "The Spatial Distribution of Wages: Estimating the Helpman-Hanson Model for Germany," Journal of Regional Science, Wiley Blackwell, vol. 44(3), pages 437-466.
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    8. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
    9. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
    10. Picard, Pierre M. & Toulemonde, Eric, 2001. "The Impact of Labor Markets on Emergence and Persistence of Regional Asymmetries," IZA Discussion Papers 248, Institute for the Study of Labor (IZA).
    11. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
    12. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    13. Thomas Ziesemer, 2005. "Monopolistic Competition And Search Unemployment," Metroeconomica, Wiley Blackwell, vol. 56(3), pages 334-359, 07.
    14. Möller, Joachim & Haas, Anette, 2002. "The agglomeration wage differential reconsidered - an investigation with German micro data 1984-1997," ERSA conference papers ersa02p327, European Regional Science Association.
    15. John Francis, 2003. "The declining costs of international trade and unemployment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 337-357.
    16. Sato, Yasuhiro, 2000. "Search theory and the wage curve," Economics Letters, Elsevier, vol. 66(1), pages 93-98, January.
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