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City Structure, Job Search, and Labor Discrimination. Theory and Policy Implications

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Author Info
Selod, Harris () (INTRA-LEA)
Zenou, Yves () (The Research Institute of Industrial Economics)

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Abstract

We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are driven by the racial preferences of households (both blacks and whites) consciously choosing to trade off proximity to neighbors of similar racial backgrounds for proximity to jobs. Because of coordination failures in the location choices, multiple urban equilibria emerge. There is a Spatial-Mismatch Equilibrium in which blacks reside far away from jobs and experience high unemployment rates and a Spatial-Match Equilibrium in which blacks are closer to jobs and experience lower unemployment rates. Under some reasonable condition, we demonstrate that all workers are better off in the Spatial-Match Equilibrium. We then consider two policies: affirmative action, and employment subsidies to the firms which hire black workers. We show that the optimal policy requires imposing larger quotas or subsidies in cities in which black workers reside far away from jobs than in cities in which they live closer to jobs.

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 620.

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Length: 52 pages
Date of creation: 18 May 2004
Date of revision:
Handle: RePEc:hhs:iuiwop:0620

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Related research
Keywords: Spatial Mismatch; Racial Preferences; Social Networks; Affirmative Action; Employment Subsidies;

Other versions of this item:

Find related papers by JEL classification:
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
R14 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Land Use Patterns

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Calvó-Armengol, Antoni & Zenou, Yves, 2003. "Job Matching, Social Network and Word-of-Mouth Communication," IZA Discussion Papers 771, Institute for the Study of Labor (IZA). [Downloadable!]
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  20. Ihlanfeldt, Keith R. & Scafidi, Benjamin, 2002. "Black Self-Segregation as a Cause of Housing Segregation: Evidence from the Multi-City Study of Urban Inequality," Journal of Urban Economics, Elsevier, vol. 51(2), pages 366-390, March. [Downloadable!] (restricted)
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  29. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. DUJARDIN Claire & SELOD Harris & THOMAS Isabelle, 2007. "Residential segregation and unemplyment : the case of Brussels," Research Unit Working Papers 0704, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
    Other versions:
  2. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2007. "The Effect of Location on Finding a Job in the Paris Region," IDEI Working Papers 433, Institut d'Économie Industrielle (IDEI), Toulouse, revised Mar 2009. [Downloadable!]
    Other versions:
  3. Laurent Gobillon & Thierry Magnac & Harris Selod, 2007. "The Effect of Location on Finding a Job in the Greater Paris Area," IZA Discussion Papers 2848, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Zenou, Yves, 2008. "Social Interactions and Labor Market Outcomes in Cities," IZA Discussion Papers 3283, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Gobillon, Laurent & Selod, Harris & Zenou, Yves, 2005. "The mechanisms of spatial mismatch," CEPR Discussion Papers 5346, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Battu, Harminder & Seaman, Paul T & Zenou, Yves, 2005. "Job Contact Networks and the Ethnic Minorities," CEPR Discussion Papers 5225, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Zenou, Yves, 2007. "Search in Cities," CEPR Discussion Papers 6197, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Yves Zenou, 2007. "High Relocation Costs in Search-Matching Models: Theory and Application to Spatial Mismatch," IZA Discussion Papers 2739, Institute for the Study of Labor (IZA). [Downloadable!]
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