Urban Labour Economic Theory
In this Paper survey some recent developments in urban labour economic theory. We first present a benchmark model in which firms set efficiency wages to prevent shirking and to compensate workers for commuting. We show that both wages and unemployment depend on commuting costs, and that housing prices as well as location are based on workers’ wages. We then extend the benchmark model in two different directions. First, by assuming that workers’ effort depends on distance to jobs, we show how firms draw a red line beyond which they do not hire workers. Second, by introducing high relocation costs so that workers do not change residence as soon as they change employment status, we show that efficiency wages now depend on distance to jobs. Finally, we use these theoretical models to give some microfoundations of a well-known stylized relationship: the spatial mismatch between residential location and workplace.
|Date of creation:||Aug 2003|
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- Zenou, Yves & Smith, Tony E., 1995.
"Efficiency wages, involuntary unemployment and urban spatial structure,"
Regional Science and Urban Economics,
Elsevier, vol. 25(4), pages 547-573, August.
- Zenou, Y. & Smith, T. E., . "Efficiency wages, involuntary unemployment and urban spatial structure," CORE Discussion Papers RP 1171, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- ZENOU, Yves & SMITH, Tony E., 1994. "Efficiency Wages, Involuntary Unemployment and Urban Spatial Structure," CORE Discussion Papers 1994076, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Zenou, Yves, 2002.
"How Do Firms Redline Workers?,"
IZA Discussion Papers
607, Institute for the Study of Labor (IZA).
- Harry J. Holzer, 1991. "The Spatial Mismatch Hypothesis: What Has the Evidence Shown?," Urban Studies, Urban Studies Journal Limited, vol. 28(1), pages 105-122, February.
- Brueckner, Jan & Zenou, Yves, 2000.
"Space And Unemployment: The Labour-Market Effects Of Spatial Mismatch,"
CEPR Discussion Papers
2397, C.E.P.R. Discussion Papers.
- Jan K. Brueckner & Yves Zenou, 2003. "Space and Unemployment: The Labor-Market Effects of Spatial Mismatch," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 242-262, January.
- Zenou, Yves, 2006.
"Efficiency wages and unemployment in cities: The case of high-relocation costs,"
Regional Science and Urban Economics,
Elsevier, vol. 36(1), pages 49-71, January.
- Zenou, Yves, 2003. "Efficiency Wages and Unemployment in Cities: The Case of High Relocation Costs," CEPR Discussion Papers 4058, C.E.P.R. Discussion Papers.
- Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May.
- Fujita,Masahisa, 1991.
"Urban Economic Theory,"
Cambridge University Press, number 9780521396455, November.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
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