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Monocentric cities, endogenous agglomeration, and unemployment disparities

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  • Zierahn, Ulrich

Abstract

The literature on the wage curve provides considerable evidence in favor of a negative relationship between unemployment and wages. It is thus often seen as a refutation of the Harris-Todaro model, who point to a positive relationship. This paper shows that both strands of literature are special cases of a more general approach by combining a New Economic Geography model with monocentric cities and efficiency wages. Whether the relationship is positive or negative depends on the transportation costs between the cities and commuting costs within them. The model helps explain whether and under which conditions the agglomeration of economic activity is associated with higher unemployment and why controls for agglomeration should be included in wage curve regressions. --

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Bibliographic Info

Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 130.

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Date of creation: 2012
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Handle: RePEc:zbw:hwwirp:130

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Keywords: New Economic Geography; Urban Economics; Efficiency Wages; Unemployment; Disparities; Regional Migration;

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Cited by:
  1. Vöpel, Henning, 2013. "A Zidane clustering theorem: Why top players tend to play in one team and how the competitive balance can be restored," HWWI Research Papers 141, Hamburg Institute of International Economics (HWWI).

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