On-the-Job Search and City Structure

40 Pages Posted: 27 Oct 2016

See all articles by Aico van Vuuren

Aico van Vuuren

Department of Economics, Gothenburg University

Date Written: February 2016

Abstract

This paper investigates an equilibrium search model in which search frictions are increasing with the distance to a city's central business district, allowing for on-the-job search and endogenous wage formation and land allocation. The findings suggest that the decentralized market results in a more segregated outcome than may be socially desirable. The externality comes from the misguided incentives for the low-paid workers, who have a high preference for central locations in order to climb up the job ladder. Policies reducing the rental costs of unemployed workers for locations close to the central business district may potentially increase welfare.

Suggested Citation

van Vuuren, Aico, On-the-Job Search and City Structure (February 2016). Available at SSRN: https://ssrn.com/abstract=2796461 or http://dx.doi.org/10.2139/ssrn.2796461

Aico Van Vuuren (Contact Author)

Department of Economics, Gothenburg University ( email )

Sweden

HOME PAGE: http://https://sites.google.com/site/aicovanvuurenshomepage/

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