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Search unemployment and new economic geography

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  • Philipp vom Berge

Abstract

This paper develops a general equilibrium geographical economics model, which uses matching frictions on the labor market to generate regional unemployment disparities alongside the usual core-periphery pattern of industrial agglomeration. In the model, regional wage differentials do not only influence migration decisions of mobile workers, but also affect the bargaining process on local labor markets, leading to differences in vacancies and unemployment as well. In a setting with two regions, both higher or lower unemployment rates in the core region are possible equilibrium outcomes, depending on transport costs and the elasticity of substitution. Stylized facts suggest that both patterns are of empirical relevance. Copyright Springer-Verlag 2013

Suggested Citation

  • Philipp vom Berge, 2013. "Search unemployment and new economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 731-751, June.
    • Handle: RePEc:spr:anresc:v:50:y:2013:i:3:p:731-751
    DOI: 10.1007/s00168-012-0535-z
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    References listed on IDEAS

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    1. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    2. Bernard Fingleton & Manfred Fischer, 2010. "Neoclassical theory versus new economic geography: competing explanations of cross-regional variation in economic development," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 467-491, June.
    3. Rainald Borck & Michael Pflüger & Matthias Wrede, 2010. "A simple theory of industry location and residence choice," Journal of Economic Geography, Oxford University Press, vol. 10(6), pages 913-940, November.
    4. Ottaviano, Gianmarco & Monfort, Philippe, 2002. "Spatial Mismatch and Skill Accumulation," CEPR Discussion Papers 3324, C.E.P.R. Discussion Papers.
    5. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    6. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
    7. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    8. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    9. Johannes Bröcker & Dirk Dohse & Rüdiger Soltwedel (ed.), 2003. "Innovation Clusters and Interregional Competition," Advances in Spatial Science, Springer, number 978-3-540-24760-9, February.
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    Cited by:

    1. Ting Zhang & Roger Stough & Dan Gerlowski, 2022. "Digital exposure, age, and entrepreneurship," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(3), pages 633-681, December.
    2. Marco Baudino, 2021. "Rural-to-urban migration in developing economies: characterizing the role of the rural labor supply in the process of urban agglomeration and city growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(3), pages 533-556, June.
    3. Kondo, Keisuke, 2015. "Spatial persistence of Japanese unemployment rates," Japan and the World Economy, Elsevier, vol. 36(C), pages 113-122.
    4. Xinmeng Li & Dao-Zhi Zeng, 2022. "Frictional unemployment, bargaining, and agglomeration," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(1), pages 151-179, February.
    5. Chul-In Lee, 2015. "Agglomeration, search frictions and growth of cities in developing economies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 421-451, December.
    6. Xi Yang, 2014. "Labor market frictions, agglomeration, and regional unemployment disparities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 489-512, March.

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    More about this item

    Keywords

    F12; J61; J64; R12;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • 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)

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