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Local Labour Markets, Job Matching and Urban Location

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  • Brueckner, Jan
  • Thisse, Jacques-François
  • Zenou, Yves

Abstract

We present a new way of modelling local labour markets by linking the space of workers' skills and the physical space of cities. The key lesson of our analysis is that firms exploit workers in these two spaces by setting wages that are below the competitive level. The degree of monopsony power depends on the elasticity of the firm's labour pool, which is inversely related to the costs workers incur in commuting and acquiring skills. Our analysis thus shows how socioeconomic ghettos emerge as workers with poor skill matches are also those who incur the highest commuting costs.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2612.

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Date of creation: Nov 2000
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Handle: RePEc:cpr:ceprdp:2612

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Keywords: Imperfect Labour Markets; Spatial Mismatch; System Of Cities;

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References

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  1. HAMILTON, John H. & MacLEOD, W. Bentley & THISSE, Jacques-François, . "Spatial competition and the core," CORE Discussion Papers RP -986, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  4. Hamilton, Jonathan & Thisse, Jacques-François & Zenou, Yves, 1999. "Wage Competition with Heterogeneous Workers and Firms," CEPR Discussion Papers 2141, C.E.P.R. Discussion Papers.
  5. Andreas IRMEN & Jean-François THISSE, 1996. "Competition in Multi-Characteristics Spaces: Hotelling Was Almost Right," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9613, Université de Lausanne, Faculté des HEC, DEEP.
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  9. Small, K.A. & Gomez-Ibanez, J.A., 1996. "Urban Transportation," Papers 95-96-4, California Irvine - School of Social Sciences.
  10. FUJITA, Masahisa & THISSE, Jacques-François, . "Spatial competition with a land market: Hotelling and Von Thunen unified," CORE Discussion Papers RP -744, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Wasmer, Etienne & Zenou, Yves, 1999. "Does Space Affect Search? A Theory of Local Unemployment," CEPR Discussion Papers 2157, C.E.P.R. Discussion Papers.
  12. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521171960, April.
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  17. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
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  20. Bartik, Timothy J., 1996. "The Distributional Effects of Local Labor Demand and Industrial Mix: Estimates Using Individual Panel Data," Journal of Urban Economics, Elsevier, vol. 40(2), pages 150-178, September.
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  22. Smith, Tony E. & Zenou, Yves, 1997. "Dual Labor Markets, Urban Unemployment, and Multicentric Cities," Journal of Economic Theory, Elsevier, vol. 76(1), pages 185-214, September.
  23. Mills, David E. & Smith, William, 1996. "It pays to be different: Endogenous heterogeneity of firms in an oligopoly," International Journal of Industrial Organization, Elsevier, vol. 14(3), pages 317-329, May.
  24. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
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