Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73056
Authors: 
Zierahn, Ulrich
Year of Publication: 
2012
Series/Report no.: 
Joint Discussion Paper Series in Economics 38-2012
Abstract: 
The literature on the wage curve provides considerable evidence in favor of a negative relationship between unemployment and wages. It is thus often seen as a refutation of the Harris-Todaro model, who point to a positive relationship. This paper shows that both strands of literature are special cases of a more general approach by combining a New Economic Geography model with monocentric cities and efficiency wages. Whether the relationship is positive or negative depends on the transportation costs between the cities and commuting costs within them. The model helps explain whether and under which conditions the agglomeration of economic activity is associated with higher unemployment and why controls for agglomeration should be included in wage curve regressions.
Subjects: 
New Economic Geography
Urban Economics
Efficiency Wages
Unemployment
Disparities
Regional Migration
JEL: 
R12
R14
R23
Document Type: 
Working Paper

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