Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20764 
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers No. 1465
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Assuming that job search efficiency decreases with distance to jobs, workers? location in a city depends on spatial elements such as commuting costs and land prices and on labour elements such as wages and the matching technology. In the absence of moving costs, we show that there exists a unique equilibrium in which employed and unemployed workers are perfectly segregated but move at each employment transition. We investigate the interactions between the land and the labour market equilibrium and show under which condition they are interdependent. When relocation costs become positive, a new zone appears in which both the employed and the unemployed co-exist and are not mobile. We demonstrate that the size of this area goes continuously to zero when moving costs vanish. Finally, we endogeneize search effort, show that it negatively depends on distance to jobs and that long and shortterm unemployed workers coexist and locate in different areas of the city.
Subjects: 
local labour markets
relocation costs
search effort
job matching
JEL: 
R14
J41
E24
Document Type: 
Working Paper

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