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Agglomeration, Congestion, and Regional Unemployment Disparities

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  • Ulrich Zierahn

    (University of Kassel)

Abstract

Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/06-2011_zierahn.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201106.

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Length: 31 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201106

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Keywords: regional unemployment; New Economic Geography; core-periphery; wage curve; labor migration;

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References

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  2. Víctor M. Montuenga-Gómez & José M. Ramos-Parreño, 2005. "Reconciling the Wage Curve and the Phillips Curve," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 735-765, December.
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  22. Hans-Friedrich Eckey & Reinhold Kosfeld & Alexander Werner, 2008. "Die Lohnkurve in Deutschland unter Berücksichtigung des regionalen Preisniveaus," MAGKS Papers on Economics 200810, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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  24. John Francis, 2009. "Agglomeration, job flows and unemployment," The Annals of Regional Science, Springer, vol. 43(1), pages 181-198, March.
  25. Sato, Yasuhiro, 2000. "Search theory and the wage curve," Economics Letters, Elsevier, vol. 66(1), pages 93-98, January.
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  29. Zierahn, Ulrich, 2011. "Regional unemployment and new economic geography," HWWI Research Papers 105, Hamburg Institute of International Economics (HWWI).
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Cited by:
  1. Ulrich Zierahn, 2012. "Monocentric Cities, Endogenous Agglomeration, and Unemployment Disparities," MAGKS Papers on Economics 201238, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Zierahn, Ulrich, 2011. "Regional unemployment and new economic geography," HWWI Research Papers 105, Hamburg Institute of International Economics (HWWI).

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