Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123146
Authors: 
Lehmann, Etienne
Montero Ledezma, Paola L.
Van der Linden, Bruno
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5506
Abstract: 
This article examines unemployment disparities and efficiency in a densely populated economy with two job centers and workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch between workers and firms. In a decentralized economy job-seekers do not internalize a composition externality they impose on all the unemployed. With symmetric job centers, a change in the distribution of the workforce can lead to asymmetric equilibrium outcomes. We calibrate the model for Los Angeles and Chicago Metropolitan Statistical Areas. Simulations suggest that changes in the workforce distribution have non-negligible effects on unemployment rates, wages, and net output, but cannot be the unique explanation of a substantial mismatch problem.
Subjects: 
spatial mismatch
commuting
urban unemployment
externality
JEL: 
J64
R13
R23
Document Type: 
Working Paper

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