Working Paper Series
Endogenous Job Destruction and Job Matching in Cities
Abstract: We propose a spatial search-matching model where both job
creation and job destruction are endogenous. Workers are ex ante identical
but not ex post since their job can be hit by a technological shock, which
decreases their productivity. They reside in a city and commuting to the
job center involves both pecuniary and time costs. Thus, workers with high
wages are willing to live closer to jobs to save on time commuting costs.
We show that, in equilibrium, there is a one-to-one correspondence between
the productivity space and the urban location space. Workers with high
productivities and wages reside close to jobs, have low commuting costs and
pay high land rents. We also show that higher commuting costs and higher
unemployment benefits lead to more job destruction.
Keywords: Job Search; Commuting Costs; Wage Distribution; Urban Land Use; (follow links to similar papers)
JEL-Codes: D83; J41; J64; R14; (follow links to similar papers)
44 pages, June 19, 2008
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