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The Wage Curve and Agglomeration

In: The European Labour Market

Author

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  • Jens Südekum

    (University of Konstanz)

Abstract

New Economic Geography models usually abstract from unemployment. By contrast, wage curve models (Blanchflower and Oswald, 1994) imply a negative correlation between regional unemployment and wages, but fail to account for agglomeration effects. Relying upon some stylised facts concerning the EU-15 regions a theoretical model is built combining a wage curve with an increasing returns technology. Large ‘core’ regions turn out having both higher equilibrium wages and lower unemployment rates than peripheral regions. Regional disparities can develop endogenously and labour mobility does not negate the wage curve mechanism, but rather strengthens it.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jens Südekum, 2006. "The Wage Curve and Agglomeration," AIEL Series in Labour Economics, in: Floro Ernesto Caroleo & Sergio Destefanis (ed.), The European Labour Market, chapter 9, pages 203-219, Springer.
    • Handle: RePEc:spr:aiechp:978-3-7908-1680-8_10
    DOI: 10.1007/3-7908-1680-9_10
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    Cited by:

    1. Cristiano Perugini & Marcello Signorelli, 2007. "Labour Market Performance Differentials and Dynamics in EU-15 Countries and Regions," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 4(2), pages 209-262, September.

    More about this item

    Keywords

    Unemployment Rate; Regional Disparity; Union Wage; Regional Unemployment; Efficiency Wage;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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