Does city structure affect job search and welfare?

Etienne Wasmer, Yves Zenou

Research output: Contribution to journalArticle

Abstract

We develop a model in which workers' search efficiency is negatively affected by access to jobs. Workers' location in a city is endogenous and reflects a trade-off between commuting costs and the surplus associated with search. Different configurations emerge in equilibrium; notably, the unemployed workers may reside far away (segregated city) or close to jobs (integrated city). We prove that there exists a unique and stable market equilibrium in which both land and labor markets are solved for simultaneously. We find that, despite inefficient search in the segregated city equilibrium, the welfare difference between the two equilibria is not so large due to differences in commuting costs. We also show how a social planner can manipulate wages by subsidizing/taxing the transport costs and can accordingly restore the efficiency.

Original languageEnglish (US)
Pages (from-to)515-541
Number of pages27
JournalJournal of Urban Economics
Volume51
Issue number3
DOIs
StatePublished - 2002

Keywords

  • Job matching
  • Transportation policies
  • Urban land use

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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