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Wages, Rents, Unemployment, and the Quality of Life

31 Pages Posted: 3 May 2012  

Matthias Wrede

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 30, 2012

Abstract

Combining a spatial equilibrium model with a matching unemployment model, this paper analyzes the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. In particular, the paper shows for quasi-linear utility that the effects of any amenity on wages and unemployment rates are of opposite sign. Additionally, the wage rate and the labor market tightness increase and the unemployment ratio decreases in reaction to an increase in the level of an amenity if the amenity is marginally more beneficial to producers than to consumers per unit of land. Based on the model, quality of life of average mobile workers in West German counties is estimated.

Keywords: quality of life, unemployment, job search, matching, mobility

JEL Classification: R120, R130, R140, H730, J610, J640

Suggested Citation

Wrede, Matthias, Wages, Rents, Unemployment, and the Quality of Life (April 30, 2012). CESifo Working Paper Series No. 3803. Available at SSRN: https://ssrn.com/abstract=2050339

Matthias Wrede (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics ( email )

Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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