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City Structure, Job Search, and Labor Discrimination. Theory and Policy Implications

Author

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  • Selod, Harris

    () (INTRA-LEA)

  • Zenou, Yves

    () (The Research Institute of Industrial Economics)

Abstract

We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are driven by the racial preferences of households (both blacks and whites) consciously choosing to trade off proximity to neighbors of similar racial backgrounds for proximity to jobs. Because of coordination failures in the location choices, multiple urban equilibria emerge. There is a Spatial-Mismatch Equilibrium in which blacks reside far away from jobs and experience high unemployment rates and a Spatial-Match Equilibrium in which blacks are closer to jobs and experience lower unemployment rates. Under some reasonable condition, we demonstrate that all workers are better off in the Spatial-Match Equilibrium. We then consider two policies: affirmative action, and employment subsidies to the firms which hire black workers. We show that the optimal policy requires imposing larger quotas or subsidies in cities in which black workers reside far away from jobs than in cities in which they live closer to jobs.

Suggested Citation

  • Selod, Harris & Zenou, Yves, 2004. "City Structure, Job Search, and Labor Discrimination. Theory and Policy Implications," Working Paper Series 620, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0620
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    Cited by:

    1. Plum, Alexander & Knies, Gundi, 2015. "Earnings prospects for low-paid workers higher than for the unemployed but only in high-pay areas with high unemployment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112845, Verein für Socialpolitik / German Economic Association.
    2. Plum, Alexander & Knies, Gundi, 2015. "Does neighbourhood unemployment affect the springboard effect of low pay?," ISER Working Paper Series 2015-20, Institute for Social and Economic Research.
    3. Alberto Bisin & Eleonora Patacchini & Thierry Verdier & Yves Zenou, 2011. "Ethnic identity and labour market outcomes of immigrants in Europe," Economic Policy, CEPR;CES;MSH, vol. 26(01), pages 57-92, January.
    4. Zenou, Yves, 2007. "Social Interactions and Labour Market Outcomes in Cities," CEPR Discussion Papers 6129, C.E.P.R. Discussion Papers.
    5. Camille Hémet, 2013. "Birds of a feather cannot always flock together: Essays on the socio-economic impacts of local diversity," Sciences Po publications info:hdl:2441/6o65lgig8d0, Sciences Po.
    6. Laurent Gobillon & Thierry Magnac & Harris Selod, 2011. "The effect of location on finding a job in the Paris region," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(7), pages 1079-1112, November.
    7. Harminder Battu & Yves Zenou, 2010. "Oppositional Identities and Employment for Ethnic Minorities: Evidence from England," Economic Journal, Royal Economic Society, vol. 120(542), pages 52-71, February.
    8. Battu, Harminder & Seaman, Paul & Zenou, Yves, 2011. "Job contact networks and the ethnic minorities," Labour Economics, Elsevier, vol. 18(1), pages 48-56, January.
    9. Nathalie Georges & Yannick L’Horty & Florent Sari, 2015. "Comment réduire la fracture spatiale ? Une application en Île-de-France," Economie & Prévision, La Documentation Française, vol. 0(1), pages 17-37.
    10. De Martí, Joan & Zenou, Yves, 2009. "Ethnic Identity and Social Distance in Friendship Formation," CEPR Discussion Papers 7566, C.E.P.R. Discussion Papers.
    11. Walid Oueslati & Seraphim Alvanides & Guy Garrod, 2015. "Determinants of urban sprawl in European cities," Urban Studies, Urban Studies Journal Limited, vol. 52(9), pages 1594-1614, July.
    12. Dujardin, Claire & Goffette-Nagot, Florence, 2010. "Neighborhood effects on unemployment?: A test à la Altonji," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 380-396, November.
    13. Yves Zenou, 2013. "Social Interactions and the Labor Market," Revue d'économie politique, Dalloz, vol. 123(3), pages 307-331.
    14. repec:spo:wpecon:info:hdl:2441/6o65lgig8d0qcro9oj5ak8gr4 is not listed on IDEAS
    15. Yannick L'Horty & Emmanuel Duguet & Loïc Du Parquet & Pascale Petit & Florent Sari, 2011. "The effect of place of residence on access to employment : a field experiment on qualified young job applicants in Ile-de-France," Working Papers halshs-00812113, HAL.
    16. Song, Yan & Zenou, Yves, 2012. "Urban villages and housing values in China," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 495-505.
    17. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    18. Zenou, Yves, 2011. "Spatial versus Social Mismatch: The Strength of Weak Ties," IZA Discussion Papers 5507, Institute for the Study of Labor (IZA).
    19. Dev, Pritha & Mberu, Blessing & Pongou, Roland, 2013. "Communitarianism, Oppositional Cultures, and Human Capital Contagion: Theory and Evidence from Formal versus Koranic Education," MPRA Paper 46234, University Library of Munich, Germany, revised 15 Apr 2013.
    20. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    21. Zenou, Yves, 2007. "High Relocation Costs in Search-Matching Models: Theory and Application to Spatial Mismatch," IZA Discussion Papers 2739, Institute for the Study of Labor (IZA).
    22. Yannick L’Horty & Florent Sari, 2008. "Les zones urbaines sensibles en Ile-de-France : Typologie des tensions territoriales," Documents de recherche 08-10, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    23. Araujo, Luis & Minetti, Raoul, 2011. "Knowledge sharing and the dynamics of social capital," European Economic Review, Elsevier, vol. 55(8), pages 1109-1119.

    More about this item

    Keywords

    Spatial Mismatch; Racial Preferences; Social Networks; Affirmative Action; Employment Subsidies;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • 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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