IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v55y2015icp39-54.html
   My bibliography  Save this article

Everybody needs good neighbors? Labor mobility costs, cities and matching

Author

Listed:
  • Torfs, Wouter
  • Zhao, Liqiu

Abstract

We develop an assignment model for a city with central and suburban labor markets connected by commuting. We show that not all workers benefit from the agglomeration economies created by the dense central business district. Low-skilled workers in the suburban district are worse off by being close to the dense central business district. High-skilled workers gain more from the urban scale. The existence of labor mobility costs induces only high-skilled workers in the suburbs to commute to the central business district, which results in a decrease in the local contact efficiency for the left-behind low-skilled workers. The empirical evidence from a Belgian linked employer–employee dataset confirms this novel finding.

Suggested Citation

  • Torfs, Wouter & Zhao, Liqiu, 2015. "Everybody needs good neighbors? Labor mobility costs, cities and matching," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 39-54.
    • Handle: RePEc:eee:regeco:v:55:y:2015:i:c:p:39-54
    DOI: 10.1016/j.regsciurbeco.2015.08.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046215000770
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2015.08.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521698221, September.
    2. Robert Shimer & Lones Smith, 2000. "Assortative Matching and Search," Econometrica, Econometric Society, vol. 68(2), pages 343-370, March.
    3. Zenou, Yves, 2011. "Search, migration, and urban land use: The case of transportation policies," Journal of Development Economics, Elsevier, vol. 96(2), pages 174-187, November.
    4. Wheeler, Christopher H., 2008. "Local market scale and the pattern of job changes among young men," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 101-118, March.
    5. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    6. Peter Ruppert & Elena Stancanelli & Etienne Wasmer, 2009. "Commuting, Wages and Bargaining Power," Annals of Economics and Statistics, GENES, issue 95-96, pages 201-220.
    7. 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.
    8. Barbara Petrongolo & Christopher Pissarides, 2006. "Scale Effects in Markets with Search," Economic Journal, Royal Economic Society, vol. 116(508), pages 21-44, January.
    9. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    10. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 477-506.
    11. Wasmer, Etienne & Zenou, Yves, 2006. "Equilibrium search unemployment with explicit spatial frictions," Labour Economics, Elsevier, vol. 13(2), pages 143-165, April.
    12. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    13. Ross, Stephen L. & Zenou, Yves, 2008. "Are shirking and leisure substitutable? An empirical test of efficiency wages based on urban economic theory," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 498-517, September.
    14. Jan Eeckhout & Philipp Kircher, 2011. "Identifying Sorting--In Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(3), pages 872-906.
    15. Jeffrey R. Campbell & Hugo A. Hopenhayn, 2005. "Market Size Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 1-25, March.
    16. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    17. repec:hal:spmain:info:hdl:2441/10031 is not listed on IDEAS
    18. Zenou, Yves, 2009. "Endogenous job destruction and job matching in cities," Journal of Urban Economics, Elsevier, vol. 65(3), pages 323-336, May.
    19. Anthony J. Venables, 2011. "Productivity in cities: self-selection and sorting," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 241-251, March.
    20. Alan Manning, 2010. "The plant size-place effect: agglomeration and monopsony in labour markets," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 717-744, September.
    21. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    22. Bruce C. Greenwald, 1986. "Adverse Selection in the Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 325-347.
    23. Gautier, P.A. & Teulings, C.N., 2009. "Search and the city," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 251-265, May.
    24. Ortega, Javier, 2000. "Pareto-Improving Immigration in an Economy with Equilibrium Unemployment," Economic Journal, Royal Economic Society, vol. 110(460), pages 92-112, January.
    25. repec:adr:anecst:y:2009:i:95-96:p:11 is not listed on IDEAS
    26. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    27. Harris Dobkins, Linda & Ioannides, Yannis M., 2001. "Spatial interactions among U.S. cities: 1900-1990," Regional Science and Urban Economics, Elsevier, vol. 31(6), pages 701-731, November.
    28. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    29. Coen N. Teulings & Pieter A. Gautier, 2004. "The Right Man for the Job," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 553-580.
    30. Edward L. Glaeser & Matthew G. Resseger, 2010. "The Complementarity Between Cities And Skills," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 221-244, February.
    31. Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-972, October.
    32. Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, vol. 77(1), pages 97-133, July.
    33. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-979, December.
    34. Freedman, Matthew L., 2008. "Job hopping, earnings dynamics, and industrial agglomeration in the software publishing industry," Journal of Urban Economics, Elsevier, vol. 64(3), pages 590-600, November.
    35. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
    36. Seater, John J, 1979. "Job Search and Vacancy Contacts," American Economic Review, American Economic Association, vol. 69(3), pages 411-419, June.
    37. repec:hal:wpspec:info:hdl:2441/10031 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kong, Dongmin & Liu, Lihua & Yang, Zhiqing, 2021. "High-speed rails and rural-urban migrants’ wages," Economic Modelling, Elsevier, vol. 94(C), pages 1030-1042.
    2. Zhou, Zhengyi & Zhang, Anming, 2021. "High-speed rail and industrial developments: Evidence from house prices and city-level GDP in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 98-113.
    3. Vandyck, Toon & Rutherford, Thomas F., 2018. "Regional labor markets, commuting, and the economic impact of road pricing," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 217-236.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    2. Tse, Chung-Yi, 2010. "Thick market externalities in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 92-105, May.
    3. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2016. "Matching, Sorting and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 63-87, January.
    4. Zenou, Yves, 2011. "Search, migration, and urban land use: The case of transportation policies," Journal of Development Economics, Elsevier, vol. 96(2), pages 174-187, November.
    5. Zenou, Yves, 2009. "Endogenous job destruction and job matching in cities," Journal of Urban Economics, Elsevier, vol. 65(3), pages 323-336, May.
    6. Christina Håkanson & Erik Lindqvist & Jonas Vlachos, 2021. "Firms and Skills: The Evolution of Worker Sorting," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 512-538.
    7. Yip, Chi Man, 2011. "Size and The City: Productivity, Match Quality and Wage Inequality," MPRA Paper 31255, University Library of Munich, Germany.
    8. Torres, Sónia & Portugal, Pedro & Addison, John T. & Guimarães, Paulo, 2018. "The sources of wage variation and the direction of assortative matching: Evidence from a three-way high-dimensional fixed effects regression model," Labour Economics, Elsevier, vol. 54(C), pages 47-60.
    9. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    10. Rasmus Lentz & Jesper Bagger, 2015. "An Empirical Model of Wage Dispersion with Sorting," 2015 Meeting Papers 1345, Society for Economic Dynamics.
    11. Patacchini, Eleonora & Zenou, Yves, 2006. "Search activities, cost of living and local labor markets," Regional Science and Urban Economics, Elsevier, vol. 36(2), pages 227-248, March.
    12. Pieter A. Gautier & Coen N. Teulings, 2015. "Sorting And The Output Loss Due To Search Frictions," Journal of the European Economic Association, European Economic Association, vol. 13(6), pages 1136-1166, December.
    13. Borowczyk-Martins, Daniel & Bradley, Jake & Tarasonis, Linas, 2018. "Racial discrimination in the U.S. labor market: Employment and wage differentials by skill," Labour Economics, Elsevier, vol. 50(C), pages 45-66.
    14. Gautier, Pieter A. & Zenou, Yves, 2010. "Car ownership and the labor market of ethnic minorities," Journal of Urban Economics, Elsevier, vol. 67(3), pages 392-403, May.
    15. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    16. Andersson, Fredrik & Burgess, Simon & Lane, Julia I., 2007. "Cities, matching and the productivity gains of agglomeration," Journal of Urban Economics, Elsevier, vol. 61(1), pages 112-128, January.
    17. repec:hal:spmain:info:hdl:2441/78hlmdbud88hhp5vbdddivv2hu is not listed on IDEAS
    18. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2016. "Matching, Sorting, and Wages," SciencePo Working papers hal-03392023, HAL.
    19. Sebastien Menard, 2019. "The impact of benefit sanctions on equilibrium wage dispersion and job vacancies," TEPP Working Paper 2019-08, TEPP.
    20. repec:spo:wpmain:info:hdl:2441/78hlmdbud88hhp5vbdddivv2hu is not listed on IDEAS
    21. Åslund, Olof & Blind, Ina & Dahlberg, Matz, 2017. "All aboard? Commuter train access and labor market outcomes," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 90-107.
    22. Coen N. Teulings & Pieter A. Gautier, 2004. "The Right Man for the Job," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 553-580.

    More about this item

    Keywords

    Job search; Assortative matching; Match quality; Labor mobility costs; Selection;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:55:y:2015:i:c:p:39-54. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.