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Urban unemployment, agglomeration and transportation policies


  • Zenou, Yves


We study the role of unemployment in the context of the endogeneous formation of a monocentric city in which firms set efficiency wages to deter shirking. We first show that, in equilibrium, the employed locate at the vicinity of the city-centre, the unemployed reside at the city-edge and firms set up in the city-centre. We then show that there is a `spatial mismatch' between location and jobs because the further away from jobs the unemployed, the larger the level of unemployment. Finally, we derive some policy implications. We show that a policy that improves the city transportation network (by subsidizing the commuting costs of all workers) reduces urban unemployment, increasing utilities of all workers but also raising inequality, whereas a policy that supports the transportation of the unemployed only (by subsidizing their commuting costs) increases urban unemployment, not always raising workers' utilities, but reducing inequality.
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  • Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, vol. 77(1), pages 97-133, July.
  • Handle: RePEc:eee:pubeco:v:77:y:2000:i:1:p:97-133

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    References listed on IDEAS

    1. Albrecht, James W & Axell, Bo, 1984. "An Equilibrium Model of Search Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 824-840, October.
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    15. 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.
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    Cited by:

    1. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    2. Zenou, Yves, 2011. "Search, migration, and urban land use: The case of transportation policies," Journal of Development Economics, Elsevier, vol. 96(2), pages 174-187, November.
    3. Borck, Rainald & Wrede, Matthias, 2005. "Political economy of commuting subsidies," Journal of Urban Economics, Elsevier, vol. 57(3), pages 478-499, May.
    4. Laurent Gobillon & Harris Selod & Yves Zenou, 2007. "The Mechanisms of Spatial Mismatch," Urban Studies, Urban Studies Journal Limited, vol. 44(12), pages 2401-2427, November.
    5. Emmanuel Duguet & Yannick L'Horty & Florent Sari, 2010. "Housing ownership, social housing and unemployment: an econometric analysis of the Paris area," Working Papers halshs-00809693, HAL.
    6. Verdier, Thierry & Zenou, Yves, 2017. "The role of social networks in cultural assimilation," Journal of Urban Economics, Elsevier, vol. 97(C), pages 15-39.
    7. Zenou, Yves & Boccard, Nicolas, 2000. "Racial Discrimination and Redlining in Cities," Journal of Urban Economics, Elsevier, vol. 48(2), pages 260-285, September.
    8. Frédéric Gavrel & Nathalie Georges & Yannick L’Horty & Isabelle Lebon, 2015. "Inadéquation des qualifications et fracture spatiale," Economie & Prévision, La Documentation Française, vol. 0(1), pages 1-16.
    9. Borck, Rainald & Wrede, Matthias, 2009. "Subsidies for intracity and intercity commuting," Journal of Urban Economics, Elsevier, vol. 66(1), pages 25-32, July.
    10. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics 02/11, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    11. Olarte Bacares, Carlos Augusto, 2013. "Impact of urban public transport enhancements on crime rate: a diff-diff analysis for the case of Transmilenio," MPRA Paper 53967, University Library of Munich, Germany, revised 10 Jan 2014.
    12. Torfs, Wouter & Zhao, Liqiu, 2015. "Everybody needs good neighbors? Labor mobility costs, cities and matching," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 39-54.
    13. Hazans, Mihails, 2002. "Social returns to commuting in the Baltic states," ERSA conference papers ersa02p232, European Regional Science Association.
    14. Saveyn Bert, 2006. "Are NIMBY's commuters?," Energy, Transport and Environment Working Papers Series ete0604, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    15. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    16. Selod, Harris & Zenou, Yves, 2003. "Private versus public schools in post-Apartheid South African cities: theory and policy implications," Journal of Development Economics, Elsevier, vol. 71(2), pages 351-394, August.
    17. Mihails Hazans, 2004. "Does Commuting Reduce Wage Disparities?," Growth and Change, Wiley Blackwell, vol. 35(3), pages 360-390.
    18. Hazans, Mihails, 2003. "Commuting in the Baltic States: Patterns, determinants and gains," ZEI Working Papers B 02-2003, University of Bonn, ZEI - Center for European Integration Studies.
    19. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    20. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
    21. Wei Xiao, 2014. "Search Frictions, Unemployment, And Housing In Cities: Theory And Policies," Journal of Regional Science, Wiley Blackwell, vol. 54(3), pages 422-449, June.
    22. Matthias Wrede, 2009. "A Distortive Wage Tax and a Countervailing Commuting Subsidy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 297-310, April.
    23. Zhu, Xueqin & Van Ommeren, Jos & Rietveld, Piet, 2009. "Indirect benefits of infrastructure improvement in the case of an imperfect labor market," Transportation Research Part B: Methodological, Elsevier, vol. 43(1), pages 57-72, January.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns


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