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Does city structure affect search and welfare?

Record type: Article

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.

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Citation

Wasmer, Etienne and Zenou, Yves (2002) Does city structure affect search and welfare? Journal of Urban Economics, 51, (3), pp. 515-541. (doi:10.1006/juec.2001.2256).

More information

Published date: 2002
Keywords: job matching, urban land use, transportation policies

Identifiers

Local EPrints ID: 33068
URI: http://eprints.soton.ac.uk/id/eprint/33068
ISSN: 0094-1190
PURE UUID: 9d444b2a-4182-444f-aa8e-727f52ac2f4f

Catalogue record

Date deposited: 15 May 2006
Last modified: 17 Jul 2017 15:54

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Contributors

Author: Etienne Wasmer
Author: Yves Zenou

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