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Wages, rents, unemployment, and the quality of life

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  • Wrede, Matthias

Abstract

Combining a spatial equilibrium model with a matching unemployment model, this paper analyzes the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. In particular, the paper shows for quasi-linear utility that the effects of any amenity on wages and unemployment rates are of opposite sign. Additionally, the wage rate and the labor market tightness increase and the unemployment ratio decreases in reaction to an increase in the level of an amenity if the amenity is marginally more beneficial to producers than to consumers per unit of land. Based on the model, quality of life of the unemployed in West German counties is estimated.

Suggested Citation

  • Wrede, Matthias, 2012. "Wages, rents, unemployment, and the quality of life," FAU Discussion Papers in Economics 01/2012, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
  • Handle: RePEc:zbw:iwqwdp:012012
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    Cited by:

    1. Norbert Hiller & Oliver Lerbs, 2015. "The capitalization of non-market attributes into regional housing rents and wages: evidence on German functional labor market areas," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 35(1), pages 49-72, February.

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    More about this item

    Keywords

    quality of life; unemployment; matching; mobility;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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