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Equilibrium Urban Unemployment

  • Etienne Wasmer


  • Yves Zenou


We introduce a spatial dimension in a search equilibrium unemployment model. By assuming that workers'search efficiency decreases with the distance to the employment-center, two urban equilibrium configurations emerge: either the unemployed reside close to the employment-center or far away from it, depending on the values of the commuting costs and of the surplus associated with search, which depends on the labor market equilibrium. The labor market equilibrium itself depends crucially on these urban equilibria. We show that the unemployment level is lower in the first urban equilibrium.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 97-22.

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Date of creation: 1997
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Handle: RePEc:crs:wpaper:97-22
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