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Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory

  • Vincent Boitier

    ()

    (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)

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    In the present article, I provide a simple urban theory where agents do not bid for land. In absence of this baseline mechanism, I show that the spatial allocation of agents is governed by a Nash equilibrium. I underline the role of asymmetric local congestion effects in insuring the existence and the uniqueness of such an equilibrium. I then use this new framework to account for spatial variation in unemployment within big cities. Namely, applying this setting in an urban search model, I demonstrate that the obtained framework can generate a large number of new city configurations in which the local unemployment rate behaves differently. I also determine conditions for which each configuration may appear. I finally prove, the existence and the uniqueness of a labor market equilibrium for each urban pattern and I draw a link between the latter and the allocation of workers throughout space.

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    Paper provided by HAL in its series Working Papers with number hal-00999559.

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    Date of creation: 03 Jun 2014
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    Handle: RePEc:hal:wpaper:hal-00999559
    Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00999559
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    1. Wasmer, Etienne & Zenou, Yves, 2006. "Equilibrium search unemployment with explicit spatial frictions," Labour Economics, Elsevier, vol. 13(2), pages 143-165, April.
    2. Mossay, P. & Picard, P.M., 2011. "On spatial equilibria in a social interaction model," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2455-2477.
    3. Claire Dujardin & Harris Selod & Isabelle Thomas, 2008. "Residential Segregation and Unemployment: The Case of Brussels," Urban Studies, Urban Studies Journal Limited, vol. 45(1), pages 89-113, January.
    4. 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.
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    7. Claire Dujardin & Florence Goffette-Nagot, 2009. "Neighborhood effects on unemployment ? A test à la Altonji," Working Papers 0924, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
    8. MOSSAY, Pascal & PICARD, Pierre M., 2013. "Spatial segregation and urban structure," CORE Discussion Papers 2013019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    16. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
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    19. Blanchet, Adrien & Mossay, Pascal & Santambrogio, Filippo, 2014. "Existence and uniqueness of equilibrium for a spatial model of social interactions," TSE Working Papers 14-489, Toulouse School of Economics (TSE).
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    21. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
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