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Efficiency Wages, Urban Unemployment and Housing Consumption

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  • Zenou, Yves

    (The Research Institute of Industrial Economics)

Abstract

The aim of this paper is to introduce endogenous housing consumption in an efficiency wage model in which two cases are considered: very high and zero relocation costs. First, in both cases, we are able to totally characterize the efficiency wage for any preferences that are quasi-linear with respect to the composite good consumption. Second, in each case, we show how endogenous housing consumption affects the value of the efficiency wage (compared to the case of fixed housing consumption) and demonstrates the existence and the uniqueness of a steady-state equilibrium. Finally, we compare the two models and show how mobility costs affect the efficiency wage setting.

Suggested Citation

  • Zenou, Yves, 2003. "Efficiency Wages, Urban Unemployment and Housing Consumption," Working Paper Series 606, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0606
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    References listed on IDEAS

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    1. Manning, Alan, 2003. "The real thin theory: monopsony in modern labour markets," Labour Economics, Elsevier, vol. 10(2), pages 105-131, April.
    2. 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.
    3. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455.
    4. 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.
    5. Zenou, Yves & Eeckhoudt, Louis, 1997. "Bid Rents under Unemployment Risk: Delayed versus Timeless Uncertainty," Journal of Urban Economics, Elsevier, vol. 42(1), pages 42-63, July.
    6. 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.
    7. 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.
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    Cited by:

    1. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.

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    More about this item

    Keywords

    Relocation Costs; Location-Dependent Wages; Urban Labor Markets;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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