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Search and the City

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  • Coen N. Teulings

    ()
    (SEO, University of Amsterdam)

  • P.A. Gautier

    ()
    (Erasmus University Rotterdam)

Abstract

We develop a model of an economy with several regions, which differ in scale. Within each region, workers have to search for a job-type that matches their skill. They face a trade-off between match quality and the cost of extended search. This trade-off differs between regions, because search is more efficient in larger regions. Then, interregional mobility and trade lead to a pattern of specialization where large scale regions have a comparative advantage in producing commodities that are search intensive, i.e. that require a wide variety of tasks and make use of scarce worker types. Empirical evidence for the United States is consistent with the implications of the model. Search can explain about two thirds of the wage differentials between large metropoles and small cities. See publication in 'Regional Science and Urban Economics' , 39(3), 251-65.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-061/3.

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Date of creation: 21 Jun 2002
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Handle: RePEc:dgr:uvatin:20020061

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Keywords: Search; Cities; Assignment; Trade;

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References

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  1. Robert E. Lucas, Jr., 2001. "Externalities and Cities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 245-274, April.
  2. B Petrongolo & Christopher Pissarides, 2003. "Scale effects in markets with search," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2248, London School of Economics and Political Science, LSE Library.
  3. Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  4. DuMond J.M. & Hisch, B.T. & Macpherson, D.A., 1996. "Wage Differentials Across Labor Markets and Workers: Does Cost of Living Matter?," Working Papers, Department of Economics, Florida State University 1996_08_01, Department of Economics, Florida State University.
  5. Pieter A. Gautier & Michael Svarer & Coenraad N. Teulings, 2005. "Marriage and the City," CESifo Working Paper Series 1422, CESifo Group Munich.
  6. Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 97-2a, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Gautier, Pieter A & Teulings, Coen N, 2003. "How Large are Search Frictions?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3861, C.E.P.R. Discussion Papers.
  8. Pieter A. Gautier & Coenraad N. Teulings & Aico van Vuuren, 2005. "On-the-Job Search and Sorting," CESifo Working Paper Series 1537, CESifo Group Munich.
  9. P. Diamond, 1980. "Aggregate Demand Management in Search Equilibrium," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 268, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Hamilton, Jonathan & Thisse, Jacques-Francois & Zenou, Yves, 2000. "Wage Competition with Heterogeneous Workers and Firms," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(3), pages 453-72, July.
  11. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September.
  12. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, American Economic Association, vol. 86(1), pages 54-70, March.
  13. Teulings, Coen N, 1995. "The Wage Distribution in a Model of the Assignment of Skills to Jobs," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(2), pages 280-315, April.
  14. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May.
  15. Coen N. Teulings & Pieter A. Gautier, 2004. "The Right Man for the Job," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 553-580.
  16. Sattinger, Michael, 1995. "Search and the Efficient Assignment of Workers to Jobs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 283-302, May.
  17. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 19(2), pages 316-42, April.
  18. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 22(1), pages 3-42, July.
  19. Coen N. Teulings, 2005. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 113(2), pages 425-461, April.
  20. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  21. Kim, Sunwoong, 1989. "Labor Specialization and the Extent of the Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(3), pages 692-705, June.
  22. Sattinger, Michael, 1975. "Comparative Advantage and the Distributions of Earnings and Abilities," Econometrica, Econometric Society, Econometric Society, vol. 43(3), pages 455-68, May.
  23. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  24. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 20(2), pages 189-212, September.
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