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  • vom Berge, Philipp

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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.

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    File URL: http://epub.uni-regensburg.de/20304/1/Diskussionsbeitrag_Nr._454.pdf
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    Bibliographic Info

    Paper provided by University of Regensburg, Department of Economics in its series University of Regensburg Working Papers in Business, Economics and Management Information Systems with number 454.

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    Date of creation: 28 Mar 2011
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    Handle: RePEc:bay:rdwiwi:20304

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    Keywords: Regional labor markets; New Economic Geography; job matching; unemployment;

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    14. 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.
    15. PICARD, Pierre M. & TOULEMONDE, Eric, . "Firms agglomeration and unions," CORE Discussion Papers RP -1892, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    16. Thomas Ziesemer, 2005. "Monopolistic Competition And Search Unemployment," Metroeconomica, Wiley Blackwell, vol. 56(3), pages 334-359, 07.
    17. Masaru Sasaki, 2007. "International migration in an equilibrium matching model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(1), pages 1-29.
    18. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
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