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Search and the city

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  • Gautier, P.A.
  • Teulings, C.N.

Abstract

We develop a model of an economy with several regions, which differ in scale. Within each region, workers have to search for a job-type that matches their skill. They face a trade-off between match quality and the cost of extended search. This trade-off differs between regions, because search is more efficient in larger regions. Then, interregional mobility and trade lead to a pattern of specialization where large scale regions have a comparative advantage in producing commodities that are search intensive, i.e. that require a wide variety of tasks and make use of scarce worker types. Empirical evidence for the United States is consistent with the implications of the model. Search can explain about two thirds of the wage differentials between large metropoles and small cities.

Suggested Citation

  • Gautier, P.A. & Teulings, C.N., 2009. "Search and the city," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 251-265, May.
  • Handle: RePEc:eee:regeco:v:39:y:2009:i:3:p:251-265
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    Cited by:

    1. Forslid, Rikard & Okubo, Toshihiro, 2017. "Early agglomeration or late agglomeration?: Two phases of development with spatial sorting," CEPR Discussion Papers 11977, C.E.P.R. Discussion Papers.
    2. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2014. "Spatial Sorting," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 554-620.
    3. Pieter A. Gautier & Coen N. Teulings, 2006. "How Large are Search Frictions?," Journal of the European Economic Association, MIT Press, pages 1193-1225.
    4. Amiti, Mary & Pissarides, Christopher A., 2005. "Trade and industrial location with heterogeneous labor," Journal of International Economics, Elsevier, pages 392-412.
    5. L. Rachel Ngai & Silvana Tenreyro, 2014. "Hot and Cold Seasons in the Housing Market," American Economic Review, American Economic Association, vol. 104(12), pages 3991-4026, December.
    6. Coen N. Teulings & Pieter A. Gautier, 2004. "The Right Man for the Job," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 553-580.
    7. Basant, Rakesh & Partha Mukhopadhyay, 2009. "An Arrested Virtuous Circle? Higher Education And High-Tech Industries In India," IIMA Working Papers WP2009-05-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    8. Pawan Agarwal, 2006. "Higher Education in India - The Need for Change," Development Economics Working Papers 22139, East Asian Bureau of Economic Research.
    9. 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.
    10. Vives Coscojuela, Cecilia, 2016. "Human Capital and Market Size," IKERLANAK Ikerlanak;2016-98, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    11. Alexander S. Skorobogatov, 2014. "An Ongoing Reversal Of Fortune Among Russian Cities: City Age, Natural Resources, And Changing Spatial Income Distribution," HSE Working papers WP BRP 60/EC/2014, National Research University Higher School of Economics.
    12. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    13. O'Flaherty, Brendan & Sethi, Rajiv, 2010. "The racial geography of street vice," Journal of Urban Economics, Elsevier, vol. 67(3), pages 270-286, May.
    14. Gautier, Pieter A. & Svarer, Michael & Teulings, Coen N., 2010. "Marriage and the city: Search frictions and sorting of singles," Journal of Urban Economics, Elsevier, vol. 67(2), pages 206-218, March.
    15. 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.

    More about this item

    Keywords

    Search Cities Assignment Trade;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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