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Agglomeration, congestion, and regional unemployment disparities

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  • Zierahn, Ulrich

Abstract

Regional labor markets are characterized by huge disparities between unemployment rates. Models of the New Economic Geography explain how disparities between 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 between regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. The level and stability of regional labor market disparities depends on the extend of labor market frictions. --

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Bibliographic Info

Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 108.

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Date of creation: 2011
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Handle: RePEc:zbw:hwwirp:108

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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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  1. Elhanan Helpman & Oleg Itskhoki, 2010. "Labour Market Rigidities, Trade and Unemployment," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 1100-1137.
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Cited by:
  1. Ulrich Zierahn, 2012. "Monocentric Cities, Endogenous Agglomeration, and Unemployment Disparities," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 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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