Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 662: On-the-job search and city structure
Aico van Vuuren ()
Additional contact information
Aico van Vuuren: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 Gothenburg, Sweden
Abstract: This paper investigates an equilibrium search model in which search frictions are increas- ing 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.
Keywords: Search; city structure; urban economics
41 pages, June 2016
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