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Efficiency Wages, Urban Unemployment and Housing Consumption

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  • Zenou, Yves

Abstract

The aim of this Paper is to introduce endogenous housing consumption in an efficiency wage model in which two cases are considered: very high and zero relocation costs. First, in both cases, we are able to totally characterize the efficiency wage for any preferences that are quasi-linear with respect to the composite good consumption. Second, in each case, we show how endogenous housing consumption affects the value of the efficiency wage (compared to the case of fixed housing consumption) and demonstrates the existence and the uniqueness of a steady-state equilibrium. Finally, we compare the two models and show how mobility costs affect the efficiency wage setting.

Suggested Citation

  • Zenou, Yves, 2003. "Efficiency Wages, Urban Unemployment and Housing Consumption," CEPR Discussion Papers 4153, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4153
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    2. 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.
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    Cited by:

    1. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.

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    More about this item

    Keywords

    Relocation costs; Location-dependent wages; Urban labour markets;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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