Working Paper Series
Efficiency Wages, Urban Unemployment and Housing Consumption
Abstract: The aim of this paper is to introduce endogenous housing
consumption in an efficiency wage model in which two cases are considered:
very high and zero relocation costs. First, in both cases, we are able to
totally characterize the efficiency wage for any preferences that are
quasi-linear with respect to the composite good consumption. Second, in
each case, we show how endogenous housing consumption affects the value of
the efficiency wage (compared to the case of fixed housing consumption) and
demonstrates the existence and the uniqueness of a steady-state
equilibrium. Finally, we compare the two models and show how mobility costs
affect the efficiency wage setting.
Keywords: Relocation Costs; Location-Dependent Wages; Urban Labor Markets; (follow links to similar papers)
JEL-Codes: J41; R14; (follow links to similar papers)
29 pages, November 10, 2003
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