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Monocentric Cities, Endogenous Agglomeration, and Unemployment Disparities

  • Ulrich Zierahn

    ()

    (University of Kassel/ HWWI)

The literature on the wage curve provides considerable evidence in favor of a negative relationship between unemployment and wages. It is thus often seen as a refutation of the Harris-Todaro model, who point to a positive relationship. This paper shows that both strands of literature are special cases of a more general approach by combining a New Economic Geography model with monocentric cities and effciency wages. Whether the relationship is positive or negative depends on the transportation costs between the cities and commuting costs within them. The model helps explain whether and under which conditions the agglomeration of economic activity is associated with higher unemployment and why controls for agglomeration should be included in wage curve regressions

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/38-2012_zierahn.pdf
File Function: First version, 2011
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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201238.

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Length: 46 pages
Date of creation: 2012
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201238
Contact details of provider: Postal:
Universitätsstraße 25, 35037 Marburg

Phone: 06421/28-1722
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Web page: http://www.uni-marburg.de/fb02/
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