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Local Trade Networks and Spatially Persistent Unemployment

  • Nienke Oomes

    (International Monetary Fund)

This paper studies the effect of local trade networks on the spatial distribution of employment in a Cooper and John (1988) type model with effective demand externalities. It is shown that, if labor can be hired in continuous quantities, then the long run spatial distribution of employment is uniform, and independent of any trade network topology. When labor has binary support, however, local trade networks are shown to generate spatial unemployment clusters which can persist indefinitely.

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Paper provided by EconWPA in its series International Trade with number 0211004.

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Length: 63 pages
Date of creation: 19 Nov 2002
Date of revision:
Handle: RePEc:wpa:wuwpit:0211004
Note: Type of Document - pdf; prepared on Macintosh; to print on HP/PostScript; pages: 63 ; figures: included
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  1. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412 National Bureau of Economic Research, Inc.
  2. L. Blume, 2010. "The Statistical Mechanics of Strategic Interaction," Levine's Working Paper Archive 488, David K. Levine.
  3. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
  4. Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February.
  5. William A. Brock & Steven N. Durlauf, 2000. "Interactions-Based Models," Working Papers 00-05-028, Santa Fe Institute.
  6. Brian Krauth, 2000. "Social Interactions, Thresholds, and Unemployment in Neighborhoods," Econometric Society World Congress 2000 Contributed Papers 1638, Econometric Society.
  7. W. A. Brock, 1993. "Pathways to Randomness in the Economy: Emergent Nonlinearity and Chaos in Economics and Finance," Working Papers 93-02-006, Santa Fe Institute.
  8. Fafchamps Marcel, 2002. "Spontaneous Market Emergence," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 2(1), pages 1-37, June.
  9. Edward L. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," NBER Working Papers 5026, National Bureau of Economic Research, Inc.
  10. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  11. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  12. Brock,W.A. & Durlauf,S.N., 2000. "Discrete choice with social interactions," Working papers 7, Wisconsin Madison - Social Systems.
  13. repec:tpr:qjecon:v:103:y:1988:i:3:p:441-63 is not listed on IDEAS
  14. Rikhil Bhavnani & Natalia T. Tamirisa & Arvind Subramanian & David T. Coe, 2002. "The Missing Globalization Puzzle," IMF Working Papers 02/171, International Monetary Fund.
  15. Marcel Fafchamps, . "Market Emergence, Trust and Reputation," Working Papers 96016, Stanford University, Department of Economics.
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