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Endogenous Job Destruction and Job Matching in Cities

  • Zenou, Yves

    ()

    (Research Institute of Industrial Economics (IFN))

We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock, which decreases their productivity. They reside in a city and commuting to the job center involves both pecuniary and time costs. Thus, workers with high wages are willing to live closer to jobs to save on time commuting costs. We show that, in equilibrium, there is a one-to-one correspondence between the productivity space and the urban location space. Workers with high productivities and wages reside close to jobs, have low commuting costs and pay high land rents. We also show that higher commuting costs and higher unemployment benefits lead to more job destruction.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 752.

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Length: 44 pages
Date of creation: 19 Jun 2008
Date of revision:
Handle: RePEc:hhs:iuiwop:0752
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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  1. Henry G. Overman & Diego Puga, 2002. "Unemployment clusters across Europe's regions and countries," Economic Policy, CEPR;CES;MSH, vol. 17(34), pages 115-148, 04.
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  4. BRUECKNER, Jan K. & THISSE , Jacques-François & ZENOU, Yves, . "Local labor markets, job matching, and urban location," CORE Discussion Papers RP -1545, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Wasmer, Etienne & Zenou, Yves, 2004. "Equilibrium Search Unemployment With Explicit Spatial Frictions," CEPR Discussion Papers 4743, C.E.P.R. Discussion Papers.
  6. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  7. 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.
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  10. Zenou, Yves, 2007. "Search in Cities," CEPR Discussion Papers 6197, C.E.P.R. Discussion Papers.
  11. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do The Poor Live In Cities?," Harvard Institute of Economic Research Working Papers 1891, Harvard - Institute of Economic Research.
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  22. BRUECKNER, Jan K. & THISSE, Jacques-François & ZENOU, Yves, . "Why is central Paris rich and downtown Detroit poor? An amenity-based theory," CORE Discussion Papers RP -1370, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  27. Sato, Yasuhiro, 2004. "City structure, search, and workers' job acceptance behavior," Journal of Urban Economics, Elsevier, vol. 55(2), pages 350-370, March.
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  29. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
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