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Frictional Spatial Equilibrium

dc.contributor.author Schmutz, B
dc.contributor.author Sidibe, Modibo
dc.date.accessioned 2016-12-07T14:59:46Z
dc.date.available 2016-12-07T14:59:46Z
dc.date.issued 2016-09-27
dc.identifier.uri https://hdl.handle.net/10161/13233
dc.description.abstract We study the properties of spatial equilibrium in an economy where locations have heterogeneous endowments and the labour market is subject to matching frictions. Both workers and firms make endogenous location decisions, which, in turn, determine the spatial distribution of unemployment, wage and firm density, as well as city population. We explain why diverse urban configurations may coexist in a country without any impediment to labour mobility, and in particular, why homogeneous workers, free to move at will, may be subject to spatial stickiness while welfare is not equalized across space. We also introduce a typology of cities based on the productivity of their local amenities, which describes the co-movement of local economic outcomes and we show that the introduction of commercial real estate induces an asymmetry between urban decline and urban growth. Positive (negative) productivity shocks are more (less) likely to increase (decrease) population than rent, rent than wages, and wages than employment.
dc.format.extent 34 pages
dc.relation.ispartof Economic Research Initiatives at Duke (ERID)
dc.subject Search Frictions
dc.subject Spatial Equilibrium
dc.subject Amenities
dc.title Frictional Spatial Equilibrium
dc.type Journal article
pubs.issue 236
pubs.organisational-group Duke
pubs.organisational-group Economics
pubs.organisational-group Trinity College of Arts & Sciences


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