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Efficiency wages, involuntary unemployment and urban spatial structure

Author

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  • ZENOU, Y.
  • SMITH, T. E.

Abstract

The labor market model is developed within an urban spatial context, where it is shown that effeciency-wage policies can lead to significant levels of involuntary unemployment. Commuting cost differences between workers and nonworkers tend to increase unemployment, and competition for land tends to segregate workers and non-workers, with nonworkers relegated to the urban fringe. These findings are extended to a two-city system, where it is shown that even with free mobility of workers, significant wage and unemployment differentials can exist between cities characterized by different levels of productivity.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Zenou, Y. & Smith, T. E., 1995. "Efficiency wages, involuntary unemployment and urban spatial structure," LIDAM Reprints CORE 1171, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1171
    DOI: 10.1016/0166-0462(95)02100-9
    Note: In : Regional Science and Urban Economics, 25, 547-573, 1995
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    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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