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How do Firms Redline Workers?

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Author Info
Zenou, Yves

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Abstract

In a city where individuals endogenously choose their residential location, firms determine their spatial efficiency wage and a geographical red line beyond which they do not recruit workers. This is because workers experiencing longer commuting trips provide lower effort levels than those residing closer to jobs. By solving simultaneously for the land and labour market equilibrium, we show that there exists a unique market equilibrium that determines the location of all individuals in the city, the land rent, the efficiency wage, the recruitment area and the unemployment level in the economy. This model is able to provide a new mechanism for the spatial mismatch hypothesis by taking the firm’s viewpoint. Distance to jobs is harmful not because workers have low information about jobs (search) or because commuting costs are too high but because firms do not hire remote workers.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3209.

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Date of creation: Feb 2002
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Handle: RePEc:cpr:ceprdp:3209

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Related research
Keywords: distance to jobs; efficiency wage; recruitment area; spatial mismatch;

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Find related papers by JEL classification:
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
R14 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Land Use Patterns

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do the Poor Live in Cities?," NBER Working Papers 7636, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  3. Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May. [Downloadable!] (restricted)
  4. Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May. [Downloadable!] (restricted)
  5. BOCCARD, Nicolas & ZENOU, Yves, 1999. "Racial discrimination and redlining in cities," CORE Discussion Papers 1999013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
    Other versions:
  6. Zax, Jeffrey S & Kain, John F, 1996. "Moving to the Suburbs: Do Relocating Companies Leave Their Black Employees Behind?," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 472-504, July. [Downloadable!] (restricted)
  7. Gottfries, Nils & McCormick, Barry, 1995. "Discrimination and open unemployment in a segmented labour market," European Economic Review, Elsevier, vol. 39(1), pages 1-15, January. [Downloadable!] (restricted)
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  8. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June. [Downloadable!] (restricted)
  9. Rogers, Cynthia L., 1997. "Job Search and Unemployment Duration: Implications for the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 42(1), pages 109-132, July. [Downloadable!] (restricted)
  10. Seater, John J, 1979. "Job Search and Vacancy Contacts," American Economic Review, American Economic Association, vol. 69(3), pages 411-19, June. [Downloadable!] (restricted)
  11. Brueckner, Jan & Zenou, Yves, 2000. "Space And Unemployment: The Labour-Market Effects Of Spatial Mismatch," CEPR Discussion Papers 2397, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Ladd, Helen F, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 41-62, Spring. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ross, Stephen L. & Zenou, Yves, 2004. "Shirking, Commuting and Labor Market Outcomes," Working Paper Series 627, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  2. Wasmer, Etienne & Zenou, Yves, 2005. "Equilibrium Search Unemployment with Explicit Spatial Frictions," IZA Discussion Papers 1465, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Ross, Stephen L. & Zenou, Yves, 2008. "Are Shirking and Leisure Substitutable? An Empirical Test of Efficiency Wages based on Urban Economic Theory," CEPR Discussion Papers 6841, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Åslund, Olof & Östh, John & Zenou, Yves, 2006. "How important is access to jobs? Old question - improved answer," Working Paper Series 2006:1, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
    Other versions:
  5. Zenou, Yves, 2003. "Efficiency Wages and Unemployment in Cities: The Case of High Relocation Costs," CEPR Discussion Papers 4058, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Laurent Gobillon & Harris Selod & Yves Zenou, 2005. "The mechanisms of spatial mismatch," Research Unit Working Papers 0510, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
    Other versions:
  7. GOBILLON Laurent & SELOD Harris, 2007. "The effects of segregation and spatial mismatch on unemployment: evidence from France," Research Unit Working Papers 0702, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
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  8. Claire Dujardin & Harris Selod & Isabelle Thomas, 2005. "Residential segregation and unemployment : the case of Brussels," Research Unit Working Papers 0511, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
    Other versions:
  9. Jan K. Brueckner & Harris Selod, 2008. "A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  10. Zenou, Yves, 2003. "Urban Labour Economic Theory," CEPR Discussion Papers 4029, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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