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Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory

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  • Vincent Boitier

    ()
    (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)

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    Abstract

    In the present article, I provide a simple urban theory where agents do not bid for land. In absence of this baseline mechanism, I show that the spatial allocation of agents is governed by a Nash equilibrium. I underline the role of asymmetric local congestion effects in insuring the existence and the uniqueness of such an equilibrium. I then use this new framework to account for spatial variation in unemployment within big cities. Namely, applying this setting in an urban search model, I demonstrate that the obtained framework can generate a large number of new city configurations in which the local unemployment rate behaves differently. I also determine conditions for which each configuration may appear. I finally prove, the existence and the uniqueness of a labor market equilibrium for each urban pattern and I draw a link between the latter and the allocation of workers throughout space.

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    Bibliographic Info

    Paper provided by HAL in its series Working Papers with number hal-00999559.

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    Date of creation: 03 Jun 2014
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    Handle: RePEc:hal:wpaper:hal-00999559

    Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00999559
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    Related research

    Keywords: Matching models; Local congestion effects; Unemployment dispersion; Segregation; Bid rent theory;

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    1. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
    2. Dujardin, Claire & Goffette-Nagot, Florence, 2010. "Neighborhood effects on unemployment?: A test à la Altonji," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 380-396, November.
    3. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
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    5. Keisuke Kawata & Yasuhiro Sato, 2011. "On-the-job search in urban areas," Discussion Papers in Economics and Business 11-03, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    6. Pascal Mossay & Pierre M. Picard, 2009. "On Spatial Equilibria in a Social Interaction Model," CREA Discussion Paper Series 09-02, Center for Research in Economic Analysis, University of Luxembourg.
    7. Pierre M. Picard & Pascal Mossay, 2013. "Spatial Segregation and Urban Structure," CREA Discussion Paper Series 13-03, Center for Research in Economic Analysis, University of Luxembourg.
    8. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    9. Chu Xuehao, 1995. "Endogenous Trip Scheduling: The Henderson Approach Reformulated and Compared with the Vickrey Approach," Journal of Urban Economics, Elsevier, vol. 37(3), pages 324-343, May.
    10. Zenou, Yves, 2006. "Efficiency wages and unemployment in cities: The case of high-relocation costs," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 49-71, January.
    11. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
    12. Sebastian Grauwin & Dominic Hunt & Eric Bertin & Pablo Jensen, 2011. "Effective Free Energy For Individual Dynamics," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 529-536.
    13. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627.
    14. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521698221.
    15. R\'emi Lemoy & Eric Bertin & Pablo Jensen, 2010. "Socio-economic utility and chemical potential," Papers 1010.3225, arXiv.org, revised Feb 2011.
    16. Wasmer, Etienne & Zenou, Yves, 2004. "Equilibrium Search Unemployment with Explicit Spatial Frictions," Working Paper Series 615, Research Institute of Industrial Economics.
    17. Madden, Janice Fanning, 1985. "Urban wage gradients: Empirical evidence," Journal of Urban Economics, Elsevier, vol. 18(3), pages 291-301, November.
    18. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    19. Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May.
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