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Endogenous Job Destruction and Job Matching in Cities

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  • Zenou, Yves

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock, which decreases their productivity. They reside in a city and commuting to the job center involves both pecuniary and time costs. Thus, workers with high wages are willing to live closer to jobs to save on time commuting costs. We show that, in equilibrium, there is a one-to-one correspondence between the productivity space and the urban location space. Workers with high productivities and wages reside close to jobs, have low commuting costs and pay high land rents. We also show that higher commuting costs and higher unemployment benefits lead to more job destruction.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 752.

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Length: 44 pages
Date of creation: 19 Jun 2008
Date of revision:
Handle: RePEc:hhs:iuiwop:0752

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Keywords: Job Search; Commuting Costs; Wage Distribution; Urban Land Use;

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References

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  1. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521698221, November.
  2. Henry Overman & Diego Puga, 1999. "Unemployment Clusters Across European Regions and Countries," CEP Discussion Papers dp0434, Centre for Economic Performance, LSE.
  3. Rappaport, Jordan & Kahn, Matthew E. & Glaeser, Edward, 2008. "Why Do The Poor Live In Cities? The Role of Public Transportation," Scholarly Articles 2958224, Harvard University Department of Economics.
  4. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do the Poor Live in Cities?," NBER Working Papers 7636, National Bureau of Economic Research, Inc.
  5. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
  6. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 215-35.
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  7. R. Jason Faberman, 2011. "The Relationship Between The Establishment Age Distribution And Urban Growth," Journal of Regional Science, Wiley Blackwell, vol. 51(3), pages 450-470, 08.
  8. Jan K. Brueckner & Jacques-FranÁois Thisse & Yves Zenou, 2002. "Local Labor Markets, Job Matching, and Urban Location," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 155-171, February.
  9. Small, K.A. & Gomez-Ibanez, J.A., 1996. "Urban Transportation," Papers 95-96-4, California Irvine - School of Social Sciences.
  10. Brueckner, Jan K. & Thisse, Jacques-Francois & Zenou, Yves, 1999. "Why is central Paris rich and downtown Detroit poor?: An amenity-based theory," European Economic Review, Elsevier, vol. 43(1), pages 91-107, January.
  11. Wheaton, William C., 1974. "A comparative static analysis of urban spatial structure," Journal of Economic Theory, Elsevier, vol. 9(2), pages 223-237, October.
  12. Smith, Tony E. & Zenou, Yves, 2003. "Spatial mismatch, search effort, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 54(1), pages 129-156, July.
  13. Freedman, Matthew L., 2008. "Job hopping, earnings dynamics, and industrial agglomeration in the software publishing industry," Journal of Urban Economics, Elsevier, vol. 64(3), pages 590-600, November.
  14. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
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  16. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627, November.
  17. Findeisen, Sebastian & Suedekum, Jens, 2007. "Industry Churning and the Evolution of Cities: Evidence for Germany," IZA Discussion Papers 3180, Institute for the Study of Labor (IZA).
  18. Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-72, October.
  19. Eleonora Patacchini & Yves Zenou, 2007. "Spatial dependence in local unemployment rates," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 169-191, March.
  20. Wasmer, Etienne & Zenou, Yves, 2004. "Equilibrium Search Unemployment With Explicit Spatial Frictions," CEPR Discussion Papers 4743, C.E.P.R. Discussion Papers.
  21. Sato, Yasuhiro, 2004. "City structure, search, and workers' job acceptance behavior," Journal of Urban Economics, Elsevier, vol. 55(2), pages 350-370, March.
  22. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, January.
  23. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  24. 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.
  25. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
  26. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-94, October.
  27. Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
  28. Gilles Duranton, 2007. "Urban Evolutions: The Fast, the Slow, and the Still," American Economic Review, American Economic Association, vol. 97(1), pages 197-221, March.
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Citations

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Cited by:
  1. Zenou, Yves, 2007. "Search in Cities," CEPR Discussion Papers 6197, C.E.P.R. Discussion Papers.
  2. repec:dgr:uvatin:2011114 is not listed on IDEAS
  3. Blien, Uwe & Messmann, Susanne & Trappmann, Mark, 2012. "Do reservation wages react to regional unemployment?," IAB Discussion Paper 201222, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  4. Giovanni Russo & Peter Nijkamp & Aura Reggiani & Federico Tedeschi, 2011. "Commuters' effect on local labour markets: A german case study," ERSA conference papers ersa10p1376, European Regional Science Association.
  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. Tse, Chung-Yi, 2010. "Thick market externalities in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 92-105, May.

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